cosco shipping international (singapore) co.,...

RESHAPINGOUR FUTURE

ANNUAL REPORT 2017

COSCO SHIPPING INTERNATIONAL (SINGAPORE) CO., LTD.

CONTENTS

OVERVIEW

01020304

Corporate Profile

Our Businesses

Corporate Structure

Financial Highlights

KEY MESSAGES

0610

Message from Chairman

Interview with Vice Chairman and President

OPERATIONS AND FINANCIAL REVIEW

1416

Operations Review

Group Financial Review

CORPORATE GOVERNANCE AND TRANSPARENCY

184142485052

Corporate Governance

Corporate Information

Board of Directors

Key Management

Investor Relations

Risk Management

SUSTAINABILITY REPORT

57 Sustainability Report

FINANCIAL STATEMENTS

74798788

89909193169171172

Directors’ Statement

Independent Auditor’s Report

Consolidated Profit or Loss

Consolidated Statement of

Comprehensive Income

Balance Sheets

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Five-Year Summary

Shareholding Statistics

Notice of Annual General Meeting

Proxy Form for Annual General Meeting

Notes for Proxy Form

INVESTOR RELATIONS CONTACTS

COSCO SHIPPING International (Singapore) Co., Ltd.

Mr Li Man Vice President

Mr Yang Xiao Qing Deputy General Manager, Investor Relations

Tel: (65) 6885 0888

Fax: (65) 6885 0858

Email: [email protected]

SPIN Capital Asia (Investor Relations Consultant)

Mr Michael Tan

Tel: (65) 6227 7790

Email: [email protected]

CORPORATEPROFILE

Overview

COSCO SHIPPING International (Singapore) Co., Ltd. (formerly known as COSCO Corporation (Singapore) Limited) aims to become one of the leading integrated logistics management service providers in South and Southeast Asia, following the 100% acquisition of Cogent Holdings Limited and 40% acquisition of PT. Ocean Global Shipping, an associated Company.

Cogent Holdings Limited has a broad based clientele, ranging from local SMEs to multinational companies. As the owner of one of Singapore’s largest one-stop integrated centres, Cogent 1.Logistics Hub, Cogent’s main businesses comprise warehousing, container depot, automotive logistics and transport management in Singapore. It also operates warehousing and container depot businesses in Malaysia.

PT. Ocean Global Shipping Group specialises in logistic service, freight forwarding and container depot services.

The Company will actively expand its logistical networks through strategic acquisitions and investments as it strives to become a key integrated logistics player in the South and Southeast Asian region.

01COSCO SHIPPING International (Singapore) Co., Ltd. • Annual Report 2017 |

Overview

OUR BUSINESSES

Dry Bulk Shipping Ship Repair and Marine Engineering

Logistics

Moving Forward

As of 31 December 2017

Dry Bulk Shippingand Others

Ship Repair and Marine Engineering

02 COSCO SHIPPING International (Singapore) Co., Ltd. | Annual Report 2017 •

Overview

CORPORATESTRUCTURE

Cogent Holdings Limited

100%

Cogent Investment Group Pte Ltd

100%

Cogent Automotive Logistics Pte Ltd

100%

Cogent Jurong Island Pte Ltd

100%

SH Cogent Logistics Pte Ltd

100%

Cogent Container Depot (M) Sdn Bhd

100%

Cogent Land Capital Pte Ltd

100%

Cogent Realty Capital Pte Ltd

100%

Greating Fortune Pte Ltd51%

Cogent Container Depot Pte Ltd

100%

SH Cogent Logistics Sdn Bhd

100%

COSCO Marine Engineering

(Singapore) Pte Ltd90%

PT. Ocean Global Shipping

40%

COSCO EngineeringPte Ltd100%

Harington Property Pte Ltd

100%

COSCO(Singapore) Pte Ltd

100%

COSCO Marine Engineering

(Singapore) Pte Ltd90%

COSCO EngineeringPte Ltd100%

Harington Property Pte Ltd

100%

COSCO(Singapore) Pte Ltd

100%

Moving Forward

As of 31 December 2017

Hanbo Shipping Limited (deregistered

in January 2018)100%

Sanbo Shipping Limited (in the process

of deregistration)100%


FINANCIAL HIGHLIGHTS

Turnover from Continuing Operations (S$’m)

Net Assets (S$’m)

Net Profit Attributable to Equity Holders (S$’m)

Revenue from Continuing Operations by Activities (%)

Dry Bulk Shipping

Others26.6%

71.9%

1.5%Ship Repair

and Marine

Engineering

Overview

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

73

71

53

41

37

(570)

(466)

264

31

21

517

2,175

2,230

1,340

321

2013

2014

2015

2016

2017

* The comparative figures have been restated as a result of the disposal of subsidiaries in the financial year ended 31 December 2017.


FINANCIAL HIGHLIGHTS

5-YEAR PROFIT OR LOSS ACCOUNTS (S$’M) 2013 2014 2015 2016 2017(RESTATED) (RESTATED) (RESTATED) (RESTATED)

Turnover from continuing operations 73.1 70.8 53.1 40.5 37.2

Profit/(loss) from continuing operations 0.1 7.5 (3.4) (26.0) (27.1)

Profit/(loss) from discontinued operations 52.7 18.8 (911.4) (950.1) 166.9

Total profit/(loss) 52.8 26.3 (914.8) (976.1) 139.8

Profit /(loss) attributable to equity holders of the Company 30.6 20.9 (570.0) (466.5) 263.9

OTHER KEY STATISTICS 2013 2014 2015 2016 2017

Number of Shares (m) 2,239.2 2,239.2 2,239.2 2,239.2 2,239.2

Basic Earnings per Share (cents) 1.4 0.9 (25.5) (20.8) 11.8

Dividend per Share (cents) 1.0 0.5 - - -

Dividend Cover (times) 1.4 1.9 - - -

Net Tangible Assets per Share (cents) 59.2 60.7 36.3 14.6 23.0

Net Assets Value per Share (cents) 59.7 61.1 36.7 15.0 23.0

Gearing Ratio (net of cash)(times) 1.3 2.5 6.0 17.2 Net Cash

Return on Equity (%) 2.3 1.5 (52.1) (80.6) 62.0

Return on Assets (%) 0.4 0.2 (5.6) (4.6) 5.1

Overview

* The comparative figures in the profit or loss have been restated as a result of the disposal of subsidiaries in the financial year ended 31 December 2017.


Key Messages

MESSAGE FROM CHAIRMAN

“We would like to thank all our

shareholders for their patience and

understanding, as we push ahead

to seek and acquire promising and

profitable businesses to replenish

our portfolio.”

Wang Yu HangChairman


Key Messages


Dear Shareholders

The past year was a very busy one for us. We divested our entire loss-making shipyard business in China and worked hard to identify and nurture new growth opportunities.

We would like to thank all our shareholders for their patience and understanding, as we push ahead to seek and acquire promising and profitable businesses to replenish our portfolio.

For the year ended 31 December 2017, the Group recorded loss from continuing operations in dry bulk shipping and other businesses of $27.1 million on turnover of $37.2 million.

Gross turnover from continuing operations decreased by 8.2% to $37.2 million for 2017 compared to 2016 mainly due to a decrease in shipping revenue from a smaller fleet of bulk carriers.

At the end of the financial year, the Group’s dry bulk shipping fleet comprised three bulk carriers after having scrapped seven bulk carriers by the end of 2017.

Overall, the Group recorded net profit attributable to equity holders of $263.9 million for the year, compared to a loss of $466.5 million for 2016.

The Group recorded profit from discontinued operations of $166.9 million for 2017 which included gain recognised on the disposal of subsidiaries of $373.6 million, offset by loss from discontinued operations of $206.7 million.

The Group’s net asset value per share at 31 December 2017 was 23.0 cents, compared to 15.0 cents for the previous year.

Bulk shipping market remains soft

While there has been some recovery in the bulk shipping market, the uptick was from a very low base and the Baltic Dry Index (BDI) has remained at a relatively low level.

The BDI, which is a measure of shipping costs for commodities, started the year at 953 points and ended 2017 at 1,366 points, averaging 1,145 points for the whole year.

Disposal of shipyard business in China

Resolutions passed at the Extraordinary General Meeting (“EGM”) to sell 51% equity interest in COSCO Shipyard Group Co., Ltd., 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd. and 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. to our China Parent Group. The deal will inject RMB 1.41 billion (net of tax) into the Company’s funds, allowing it to invest in promising businesses.

The Group had sustained substantial losses in its shipyard business over the last few financial years, owing to highly challenging market conditions. The disposal is an effort to stem further losses, reduce the Company’s debt and improve its financial position.


Key Messages

On 6 March 2018, the Company has completed the compulsory acquisition. Following the competition of the compulsory acquisition, Cogent has become a wholly-owned subsidiary of the Company. Cogent has been delisted from the official list of the SGX-ST on 8 March 2018.

The Group’s control of one of Singapore’s leading full service, integrated logistics service providers with a track record of over 40 years will help us to transform our business to offer end-to-end services to our customers with logistical needs in Singapore and Malaysia. The Company intends for Cogent to carry on with its existing business activities.

Singapore continues to advance as logistics hub

Singapore, one of the largest cargo hubs in the world, saw its sea cargo throughput continue to increase in 2017. Total cargo tonnage handled by the Port of Singapore increased by 5.5% to 626.2 million tonnes in 2017, compared to 593.3 million tonnes in 2016. The number of vessel arrival tonnage was up by 5.1% to reach 2.8 billion gross tonnes in 2017.

Singapore continues to be a highly promising growth centre for logistics in the region. The World Bank’s Logistics Performance Index in 2016 ranked the country as Asean’s logistics hub for the 10th consecutive year, globally the country is ranked fifth.

Reshaping our business throughacquisitions

On 3 November 2017, the Company announced that it had entered into a Share Sale and Purchase Agreement with COSCO SHIPPING (South East Asia) Pte Ltd to acquire approximately 40% of the issued and paid-up share capital of PT. Ocean Global Shipping, incorporated in Indonesia, for a consideration of S$13,953,371 payable in cash. PT. Ocean Global Shipping’s business includes logistic service, freight forwarding and container depot services.

On 3 November 2017, the Company made a voluntary conditional cash offer for all the shares of Cogent Holdings Limited, one of Singapore’s leading logistics management service providers, and its subsidiaries, with a consideration of S$1.02 per share amounting to approximately S$488 million.

On 2 January 2018, the Company received valid acceptances representing approximately 92.05% of the total number of shares. With that, the Offer Acceptance Condition had been satisfied and the Offer had become unconditional as to acceptances and in all other respects.

“The Company will continue the hard work to reshape our future. We will

accelerate our efforts to actively look for other investment opportunities, to

potentially develop new businesses in South and Southeast Asia’s logistics

sectors.”



Key Messages

Singapore is well-positioned to take advantage of developments in South and Southeast Asia that are set to transform the logistics industry in region, driven by regional economic integration, free trade agreements and e-Commerce. The projected high growth of the economies of India, Indonesia, Thailand, Vietnam, and the Philippines will further fuel demand for transportation and logistics services in these countries.

World economic and trade outlooklooking more positive

The vibrant South & South East Asian economies can also look forward to stronger economic growth worldwide. The International Monetary Fund (IMF) in its World Economic Outlook updated in January 2018 projected the global economy to rise to 3.9% in 2018 and 2019, from 3.7% in 2017. It said the revision reflected the stronger global growth momentum.

The stronger economic growth has resulted in the World Trade Organisation (WTO) raising its forecast for global trade forecast to 3.6% for the entire 2017 from its previous estimate of 2.4%. WTO has attributed the stronger growth in 2017 to a resurgence of Asian trade and a pickup in intra-regional shipments. It expects trade growth to moderate in 2018 to around 3.2% within its full range estimate of 1.4% to 4.4%.

While business confidence has improved generally, we still see uncertainty and confusion in the volatile world due to new leadership styles in some countries and continued conflicts around the world. Going forward, we will continue to be vigilant and to tread cautiously.

Potential opportunities

The Company will continue the hard work to reshape our future. We will accelerate our efforts to actively look for other investment opportunities, to potentially develop new businesses in South and Southeast Asia’s logistics sectors. We will also work closely with external consultants and industry experts to align with China’s One Belt, One Road (OBOR) Vision.

Deep appreciation

On behalf of the board I would like to record our deep appreciation to our staff and the various business associates for their support during the year as we prepared for our exit from the loss-making shipyard business into fresh business ventures.

We are also very thankful to our shareholders for their patience and support as we endeavour to transit into new revenue streams.

The Board has resolved not to recommend payment of dividend for the financial year ended 31 December 2017 as the Company was evaluating various strategic moves to expand its business.

Thank you.

WANG YU HANGChairman



“We aim to become a comprehensive

service provider across the entire

logistics value chain to meet the

expected increase in demand in the

years ahead as South and Southeast

Asia continues to enjoy exponential

economic growth.”

INTERVIEW WITHVICE CHAIRMAN AND PRESIDENT

Key Messages

Gu Jing SongVice-Chairman and President


1. Which area of the logistics value chain do you expect to see exponential growth in the future, especially in the South and Southeast Asia region?

We aim to become a comprehensive service provider across the entire logistics value chain to meet the expected increase in demand in the years ahead as South and Southeast Asia continues to enjoy exponential economic growth.

The Asian Development Bank has projected economic growth of 7.2% in 2018, from 7% in 2017, for South Asian countries. The growth, driven by expected double-digit rise in middle class consumption of goods and services, will drive expansion of the logistics sector.

ASEAN (Association of Southeast Asian Nations) is expected to see an increase in trade volume by 130% at an estimated value of some US$5.7 trillion by 2023, mainly driven by a rise in demand for goods and services in China, India and other countries in the region.

The ASEAN grouping is seen as a single market with multiple free trade agreements with its Dialogue Partners such as China, Korea, Japan, India, Australia and New Zealand that augurs well for the volume of goods and services into the region.

The ASEAN Connectivity Master Plan envisages enhanced trade routes, improved speed and reliability of supply chains in each Member State and lower supply chain costs.

Singapore too, is an excellent location for the logistics business. It is an established prime location for major logistics firms, with 20 of the top 25 global logistics players operating here.

Furthermore, the Singapore government has introduced the Sea Transport Industry Transformation Map with the aim to expand the industry’s real value-add by S$4.5 billion by 2025. It will be building on its existing strategies to develop Singapore into a global maritime centre and further reinforce its position as a leading logistics and supply chain management hub.

This augurs well for our Company as we transform ourselves into a regional logistics provider by growing our network further through acquisitions to leverage on economy of scale and the experience of our China Parent Company.

Key Messages

INTERVIEW WITH VICE CHAIRMAN AND PRESIDENT


3. In what ways does COSCO SHIPPING intend to expand the capability and competiveness of its logistics business in the years ahead?

We are on a mission to seek opportunities to reshape the Company by growing our business portfolio to expand our capability and increase our revenue streams. We will use the proceeds from the disposal of our loss-making shipyard assets to acquire new businesses in the logistics space.

There are certainly opportunities for us to synergise our newly-acquired logistics business with the operations of associated companies in the China COSCO SHIPPING Group. With the Group’s co-operation and extensive network, we aim to increase our service offerings and further enhance our value propositions to support our strategy to grow our customer base and revenues.

We plan to further improve our infrastructure and service capability to become a leader in providing integrated logistics solutions across the entire logistics value chain.

INTERVIEW WITHVICE CHAIRMAN AND PRESIDENT

2. How do you think the Company can benefit from the One Belt, One Road (“OBOR”) initiative by China in the years ahead?

We believe the belt and road initiative will help not only to strengthen economic relations between the 10 ASEAN member states and China, it will also connect the region with a much wider market and open up a lot of opportunities for further economic growth.

Two-way investment between China and ASEAN has been reported to have exceeded US$160 billion in 2016, as more Chinese companies venture into the region.

Bilateral trade which reached almost half a trillion US dollars in 2015 has been targeted to hit US$1 trillion by the end of 2020.

With the expected rapid expansion of trade between them, we can expect the ASEAN states to make more investments in infrastructure, including facilities to boost logistics capability and efficiency, such as road, ports and warehousing facilities. This will help to make the region an important trade node on the global map.

That will be good for our business. We will position our Group to take advantage of the economic expansion in the region to further grow our revenues.

Key Messages


INTERVIEW WITH VICE CHAIRMAN AND PRESIDENT

4. What are your key considerations for investing in future logistics businesses?

One of the key considerations for any new investment will be its track record and how well it can fit into the overall strategy of our Company. It must have a lot of synergistic potential to further extend our service capability and market footprint.

It is also very important for us to take into consideration the target Company’s market territory, the portfolio and location of its assets and the scalability of its business.

To ensure we can extract as much value as possible from the acquisition, we will carefully weigh the analyses and advice from our internal team and external consultants before recommending it to the Board.

While we are eager to grow our logistics business as quickly as possible, we must also exercise prudent due diligence to ensure that every new investment will be sustainable and will contribute positively to our Company’s future.

5. Going forward, what is your sense of the market for the Group?

Globally, economic conditions seem to have improved in 2017 and reports have suggested that 2018 will be a better year. We certainly hope so.

Singapore’s economy had performed remarkably well in 2017 with Gross Domestic Product (GDP) growth of 3.5%, outperforming even the government’s earlier estimates. For 2018, government forecasters expect economic growth of between 1.5% and 3.5%.

The International Monetary Fund (IMF) had in its revised World Economic Outlook Report in January 2018 projected growth of 3.9% for 2018 and 2019, 0.2% point higher than its estimate for 2017, attributing the more upbeat forecast to the stronger pace of global growth. However, it cautioned that risk remained skewed to the downside over the medium term, including the increase in core inflation in advanced economies and interests rates. It said vulnerabilities include geopolitical tensions, political uncertainty and inward-looking polices.

Technology has also been changing the way business is being done, and continues to pose many challenges including greater competition across the entire market landscape.

We believe there will be much opportunity for us to further build our capability in the logistics space. We are moving forward positively, but with discriminate caution.

Key Messages


Operations and Financial Review

OPERATIONS REVIEW

Discontinued shipyard operations

On 5 May 2017, the Group announced the disposal of all the shipyard assets in China to the Parent Group. The transaction was on a willing-buyer and willing-seller basis after taking into account the value of net assets and profits and losses till 31 March 2017.

In August 2017, the Group’s shareholders approved the sale of 51% equity interest in COSCO Shipyard Group Co., Ltd., 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd. and 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. (collectively the Group’s shipyard business in China).

The relevant authorities in China have given their approval for the transfer of shareholdings of COSCO Shipyard Group Co., Ltd. and COSCO (Dalian) Shipyard Co., Ltd. in October 2017 and COSCO (Nantong) Shipyard Co., Ltd. in November 2017. Accordingly, the 3 entities ceased to be subsidiaries of the Company on the respective dates. The entire results from COSCO Shipyard Group Co., Ltd., COSCO (Nantong) Shipyard Co., Ltd. and COSCO (Dalian) Shipyard Co., Ltd. and the resulting gain on disposal of subsidiaries are presented separately on the Consolidated Profit or Loss as “Discontinued Operations”.

The Group recorded profit from discontinued operations of $166.9 million for 2017 which included gain recognised on the disposal of subsidiaries of $373.6 million, offset by loss from discontinued operations of $206.7 million.


OPERATIONS REVIEW

Continuing operations

The Group recorded loss from continuing operations in dry bulk shipping, ship repair, marine engineering related activities and rental of property of $27.1 million on turnover of $37.2 million for 2017.

Seven bulk carriers were scrapped by the end of 2017. Currently, the Group’s dry bulk shipping fleet comprises three bulk carriers.

Companies owning the seven scrapped bulk carriers have since been or will be deregistered from the Registrar of Business in Singapore and Hong Kong.

During the financial year, there was some recovery in charter rates of bulk carriers, though it was from a very low base. The Baltic Dry Index (BDI), which is a measure of shipping costs for commodities, started the year at 953 points and ended the period at 1,366 points, averaging 1,145 points for the entire year.



GROUP FINANCIAL REVIEW

OVERVIEW The Group recorded net profit attributable to equity holders of $263.9 million for FY 2017.

Continuing Operations

The Group recorded loss from continuing operations in dry bulk shipping and other businesses of $27.1 million on turnover of $37.2 million for FY 2017.

Group turnover from continuing operations decreased by 8.2% to $37.2 million for FY 2017 compared to FY 2016 mainly due to a decrease in shipping revenue from a smaller fleet of bulk carriers. Currently, the Group’s dry bulk shipping fleet comprises 3 bulk carriers, having scrapped seven bulk carriers by the end of FY 2017.

The Baltic Dry Index (BDI), which is a measure of shipping costs for commodities, started the year at 953 points and ended the year at 1,366 points. For FY 2017, the BDI averaged 1,145 points which was a 70.1% increase from the average of 673 points in FY 2016. Whilst there has been some recovery, such recovery was made from a very low base and the BDI remains at a relatively low level.

Gross profit for FY 2017 was $11.6 million as compared to gross loss of $6.0 mill ion in FY 2016 mainly due to some recovery in the relatively low charter rates of bulk carriers and write-back of accrued owner’s expenses for vessels that have been scrapped.

Other losses increased by $21.5 million to $24.3 million for FY 2017 mainly due to the loss on disposal of property, plant and equipment.

Loss attributable to equity holders of the Company for continuing operations increased by 4.3% to $27.2 million, as compared to FY 2016.

Discontinued Operations

The Group recorded net profit from discontinued operations of $166.9 million for FY 2017 which included gain recognised on the disposal of subsidiaries of $373.6 million, offset by loss from discontinued operations of $206.7 million.

CASH FLOW

Net cash provided by operating activities for FY 2017 was $341.9 million compared to net cash used in operating activities of $438.4 million in FY 2016.

Net cash used in investing activities for FY 2017 was $1.3 billion mainly due to the net cash outflow on disposal of subsidiaries.

Net cash used in financing activities was $509.4 million. This was mainly due to net repayments of bank borrowings and interest paid during FY 2017.



GROUP FINANCIAL REVIEW

BALANCE SHEET (31 December 2017 vs 31 December 2016)

Assets and Liabilities

In August 2017, the Group’s shareholders approved the sale of 51% equity interest in COSCO Shipyard Group Co., Ltd., 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd. and 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. (collectively “the Group’s shipyard business in China”). The relevant authorities in China have given their approval for the transfer of shareholdings of COSCO Shipyard Group Co., Ltd. and COSCO (Dalian) Shipyard Co., Ltd. in October 2017 and COSCO (Nantong) Shipyard Co., Ltd. in November 2017. Accordingly, the 3 entities ceased to be subsidiaries of the Company on the respective dates and the carrying value of the assets, liabilities and non-controlling interest of the former subsidiaries have been de-recognised from the balance sheet.

The Group’s total assets and total liabilities as at 31 December 2017 were $564.1 million and $47.5 million respectively.

Equity

COSCO’S share capital remained unchanged at $270.6 million. There was no new issue and allotment of shares under the COSCO Group Employees’ Share Option Scheme 2002.

Statutory and other reserves deficit of $19.0 million was mainly due to foreign currency translation loss.

Capital and reserves attributable to equity holders of the Company increased by $179.1 million to $515.2 million was mainly due to the gain on disposal of subsidiaries.

GEARING

Following the disposal of the Group’s shipyard business in China, the Group is in a net cash position as at 31 December 2017.

NET ASSET VALUE PER SHARE

The Group’s net asset value per share increased by 53.3% from 15.0 cents per share as at 31 December 2016 to 23.0 cents per share as at 31 December 2017.



Corporate Governance and Transparency

CORPORATEGOVERNANCE

COSCO SHIPPING International (Singapore) Co., Ltd. (formerly known as COSCO Corporation (Singapore) Limited)(“COSCO SHIPPING” or the “Company”) and its subsidiaries (together, the “Group”) believe that good corporate governance is essential to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the Company.

The Board of Directors (the “Board”), guided by the Singapore Code of Corporate Governance 2012 (the “CG Code 2012”) issued by the Monetary Authority of Singapore (the “MAS”) and the disclosure guide developed by the Singapore Securities Trading Limited (the “Guide”), remains committed to the principles and guidelines stated therein to achieve high standards of business integrity, ethics and professionalism across all its activities. The Company complies with all key principles and guidelines set out in the CG Code 2012. Appropriate explanations have been provided in the relevant sections below where there are deviations from the CG Code 2012 and/or the Guide.

A. BOARD MATTERS

THE BOARD’S CONDUCT OF AFFAIRS Principle 1

Governance is overseen by the Board together with Management, led by the Group President and accountable to the Board. All directors make decisions objectively in the best interests of the Company and have exercised due diligence and independent judgment in so doing.

The principal functions of the Board apart from its statutory responsibilities are:

a) to provide entrepreneurial leadership; approve the strategic objectives, corporate policies and authorisation matrix of the Company; and ensure that the necessary financial and human resources are in place for the Company to meet its objectives;

b) to approve the nominations to the Board and appointment of key management, as may be recommended by the Nominating Committee;

c) to oversee the processes for risk management, financial reporting and compliance and evaluate the adequacy of internal controls; approve annual budget, key operational matters, major acquisition and divestment proposals, major funding proposals of the Company;

d) to assume responsibility for corporate governance framework of the Company and establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders’ interests and Company’s assets;

e) to review management performance;

f) to identify the key stakeholder groups and recognise that their perceptions affect the Company’s reputation;

g) to set values and standards (including ethical standards) of the Company and ensure that obligations to shareholders and others are understood and met;

h) to monitor and manage potential conflict of interest between the key management personnel, the Board and the shareholders; and

i) to promote corporate social responsibilities throughout the Group and include environmental and social factors as part of its strategic formulation.



CORPORATEGOVERNANCE

The Board has delegated certain functions to the established Board Committees, namely Strategic Development, Enterprise Risk Management, Audit, Nominating and Remuneration Committees, save for the following matters which are reserved for the Board’s decision:

l the recommendations of the Strategic Development Committee;

l the Group’s long term objectives and commercial strategy;

l the making of any decision to cease to operate all or any material part of the business of the Group or to extend the Group’s activities into new business;

l the consideration of any proposal to merge or amalgamate the Company with any other Company;

l the approval of any acquisition of any investment, asset or business by the Company or any of its subsidiaries which would involve the commencement of an activity of a substantially different nature or character to any activity from time to time carried on by the Company or any of its subsidiaries;

l the approval of any changes relating to the Group’s capital structure including changing the amount or currency of the Company’s share capital, reduction of capital, share issues (except under employee share options plan);

l the approval of risk management policy for the Company and its subsidiaries;

l the approval of the Company’s quarterly results, audited financial statements and other appropriate statements for inclusion in the Company’s Annual Report as well as the issuance of Annual Report;

l the recommendation of the payment of any dividend by the Company or any exercise of the powers of the Board in relation to reserves or capitalisation of profit;

l appointment or removal of director from the Board (with recommendation made by the Nominating Committee) and the appointment or removal of the Company Secretary;

l make changes to the structure and size of the Board, following receipt of recommendation from the Nominating Committee;

l in the case of any conflict of interest which the Board, after being appropriately advised, considers to be material, as to whether such conflict should be authorised and, if so, authorise such conflict upon such terms and conditions as the Board considers appropriate;

l determining the remuneration packages for senior executives of the Company (following receipt of recommendation by the Remuneration Committee);

l reviewing the performance of the Board annually; and

l any matter required to be considered or approved by the Board as a matter of law or regulation.

During the financial year, the Board had met seven (7) times to discharge its duties and had on various occasions used circular resolutions in writing to sanction certain decisions. Day to day management of the Group has been delegated to the Group President and Executive Directors.


CORPORATEGOVERNANCE


The attendance of the Directors at meetings of the Board and Board Committees for financial year ended 31 December 2017 is set out in the table below:

Name

Type of Meetings

Board

Committee

Audit Nominating Remuneration

Enterprise Risk

ManagementStrategic

Development

No. ofMeetings

held: 7

No. ofMeetings

held: 6

No. ofMeeting held: 1


No. ofMeetings

held: 4


No. ofMeetingsAttended


No. ofMeetingAttended




Wang Yu Hang 2 NA NA NA NA 0

Gu Jing Song 7 NA 1 1 4 0

Li Xi Bei 5 NA NA NA 3 NA

Liang Yan Feng 4 NA NA NA 2 NA

Tom Yee Lat Shing 4 4 0 1 3 0

Wang Kai Yuen 7 6 1 1 4 0

Er Kwong Wah 7 6 1 1 4 0

Ang Swee Tian 7 6 1 1 4 0

Li Man(Alternate to Wang Yu Hang)

7 NA NA NA NA NA

Ouyang Chao Mei(Alternate to Liang Yan Feng)

6 NA NA NA 4 NA

NA - Not Applicable

For effective planning, the schedule of all Board and Board Committee meetings for the next calendar year is always planned in advance. A special Board meeting will be conducted for special project whenever it is required. The Company’s Constitution (the “Articles”) allows Board meetings to be conducted by way of telephone and video conferencing.


CORPORATEGOVERNANCE


BOARD COMPOSITION AND GUIDANCE Principle 2

The Board has eight (8) members: two (2) Executive Directors, two (2) Non-Executive Directors and four (4) Non-Executive Independent Directors. No individual or group of individuals dominates the Board’s decision-making. Collectively, the Non-Executive Directors and Non-Executive Independent Directors bring a wide range of experience and expertise as they all currently occupy or have occupied senior positions in industry and public life, and as such, each contributes significant weight to Board decisions. None of the Non-Executive Independent Directors has any relationship with the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Company.

The Company’s policy in identifying director nominees is primarily to have an appropriate mix of members with complementary skills, core competencies and experience, regardless of gender.

The Company will continuously assessing the existing attributes and core competencies of the Board with a view to enhance the efficacy of the Board and the strategic direction of the Group to determine the skill set of the Directors required when appointing new directors and/or re-appointment of incumbent directors to ensure Board balance and diversity.

The Board believes that there is a strong and independent element on the Board and allows the Board to exercise objective judgment on corporate affairs independently from Management and 10% shareholders.

It is also noted that the Company met the requirement to have at least half of the Board where the Chairman is not an independent director pursuant to Guideline 2.2 of the CG Code 2012 as 4 out of the 8 Board members of the Company are Independent Directors.

The Board of COSCO SHIPPING comprises the following members:

Wang Yu Hang Chairman and Non-Independent Non-Executive DirectorGu Jing Song Vice Chairman, President and Non-Independent Executive DirectorLi Xi Bei Non-Independent Executive DirectorLiang Yan Feng Non-Independent Non-Executive DirectorTom Yee Lat Shing Non-Executive Lead Independent DirectorWang Kai Yuen Non-Executive Independent Director Er Kwong Wah Non-Executive Independent Director Ang Swee Tian Non-Executive Independent Director

The Directors’ profiles are set out on pages 42 to 47 of this Annual Report.

The Board assesses its effectiveness as a whole and the contribution by each Director to the effectiveness of the Board annually. It is of the view that the current size of the Board is appropriate and will facilitate effective decision making. The Board, collectively, possess an appropriate balance and diversity of skills, experience and knowledge of the Company, which provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning experience and customer-based experience and knowledge.


CORPORATEGOVERNANCE


Rigorous reviews have been carried out by the Board to assess the independent status of Mr Tom Yee Lat Shing (who was appointed on 16 November 1993), Dr Wang Kai Yuen (who was appointed on 2 May 2001), Mr Er Kwong Wah (who was appointed on 20 December 2002) and Mr Ang Swee Tian (who was appointed on 13 November 2007), who have served on the Board beyond nine years and was of the view that these Directors are objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. All of them are considered independent in accordance with the Guideline 2.3 of the CG Code 2012.

All the Independent Directors had confirmed that they do not have any relationship and business dealing with the Management and 10% shareholders of the Company.

The Board will continue reviewing the size and composition of the Board and the independent status of its directors on an ongoing basis.

Directors are provided with regular updates on relevant new laws and regulations, and evolving commercial risks and business conditions from the Company’s relevant advisors. Newly appointed directors would receive a formal letter setting out the director’s duties and obligations and receive comprehensive and tailored induction and training in areas such as accounting, legal and industry-specific knowledge on joining the Board. Visits are arranged for Non-Executive Independent Directors to acquaint them with important operations overseas.

STRATEGIC DEVELOPMENT COMMITTEE

The Strategic Development Committee (“SDC”) comprises the following directors, majority of whom is independent directors:

Gu Jing Song (Chairman) Non-Independent Executive Wang Yu Hang Non-Independent and Non-ExecutiveTom Yee Lat Shing Non-Executive Lead Independent Wang Kai Yuen Non-Executive Independent Er Kwong Wah Non-Executive Independent Ang Swee Tian Non-Executive Independent

The Board acknowledges the importance of strategic planning and development. SDC assists the Board in fulfilling its responsibilities for developing, evaluating and monitoring the Company’s long and short-term strategic goals. The SDC operates at the Board level but does not assume the Board’s governance accountability or to make final strategic decisions. The SDC acts solely to address and develop current and future strategy-related issues. It has the responsibility for creating and driving the Company’s strategy development and planning and Management takes responsibility for implementing the Company’s strategies after the SDC received approval from the Board.


CORPORATEGOVERNANCE


The SDC has the following authority and responsibilities:

a) Review and develop Company Strategies: Meet with Management periodically to review, develop and evaluate the Company’s evaluation and implementation of its business strategy;

b) Provide Resource Support: Support the Board or Management in the evaluation and/or refining of the Company’s strategic plans;

c) Assess Progress: Review and assess the status of implementation of the Company’s business strategy and whether the results are consistent with the goals of the strategic plan as adopted by the Board; and

d) Recommend Improvements: Recommend areas of improvement and provide feedback to the Board and Management regarding the overall success of the business strategy.

During the financial year, the strategies issues were discussed extensively and decided at the Board level. As such, there was no SDC meeting held during the year.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER Principle 3

Mr Wang Yu Hang and Mr Gu Jing Song, who are not related to each other, are respectively the Chairman of the Board and the President of the Company. The roles of Chairman and the President undertaken by separate persons will create a clear division of responsibilities and maintain an effective oversight.

The Chairman is responsible for the workings of the Board, ensuring the integrity and effectiveness of its governance process. In his absence, his appointed alternate would act on his behalf.

The President is the most senior executive in the Company and has full executive responsibilities over the business directions and operational decisions of the Group. He works closely with the Board to implement the policies set by the Board to realise the Group’s vision.

BOARD MEMBERSHIP Principle 4

Recommendations for nominations of new directors and retirement of directors are made by the Nominating Committee (“NC”) and considered by the Board as a whole.

The NC reviews and assesses candidates for directorship before making recommendations to the Board. The NC takes into consideration the skills and experience required and the existing composition of the Board and strives to ensure that the Board has an appropriate balance of independent directors as well as directors with the right profile of expertise, skills, attributes and abilities when recommending new directors to the Board.


CORPORATEGOVERNANCE


The process for the appointment of new directors begins with the NC, together with the Chairman and President cum Vice Chairman of the Company, conducting a needs analysis and identifying the critical requirement in terms of expertise and skills that are needed in the context of the strengths and weaknesses of the existing Board. When a candidate has been endorsed by the NC, the NC will then make a recommendation to the Board for the approval of his appointment.

The NC assesses and recommends to the Board whether retiring directors are suitable for re-nomination for re-election. In evaluating a director’s contribution and performance for the purpose of re-nomination, the NC takes into consideration a variety of factors such as attendance, preparedness, participation and candour.

In accordance with the provisions of the Constitution, one-third of the Directors retires by rotation and subjected themselves to re-election at every Annual General Meeting (“AGM”) of the Company. In addition, new directors who were appointed by the Board during the year will hold office only until the next AGM and will be eligible for re-election.

The dates of initial appointment and last re-election of each of the Directors of the current Board are set out below:

Director PositionDate of InitialAppointment

Date of LastRe-election/

Re-appointment

Wang Yu Hang Chairman and Non-Independent and Non-Executive

19.1.2016 22.4.2016

Gu Jing Song Vice Chairman, President and Non-Independent Executive

30.8.2016 20.4.2017

Li Xi Bei Non-Independent Executive 30.8.2016 20.4.2017

Liang Yan Feng Non-Independent and Non-Executive 8.7.2014 20.4.2017

Tom Yee Lat Shing

Non-Executive Lead Independent 16.11.1993 22.4.2016

Wang Kai Yuen Non-Executive Independent 2.5.2001 20.4.2017

Er Kwong Wah Non-Executive Independent 20.12.2002 24.4.2015

Ang Swee Tian Non-Executive Independent 13.11.2007 22.4.2016

Li Man Alternate to Wang Yu Hang 19.1.2016 NA

Ouyang Chao Mei Alternate to Liang Yan Feng 8.7.2014 NA

Note: NA - Not Applicable


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NOMINATING COMMITTEE

The NC comprises five Directors, majority of whom including the Chairman is independent. The NC members are as follows:

Wang Kai Yuen (Chairman) Non-Executive Independent Gu Jing Song Non-Independent ExecutiveTom Yee Lat Shing Non-Executive Lead Independent Er Kwong Wah Non-Executive Independent Ang Swee Tian Non-Executive Independent

The principal functions of the NC are to:

a) identify, review and recommend candidates for appointment as Directors of the Company and appointment to the Board committees as well as to senior management positions in the Company;

b) assess the qualifications of the proposed alternate directors to the Board;

c) evaluate the effectiveness of the Board as a whole and assess the contribution by each Director, to the effectiveness of the Board;

d) determine annually whether or not a Director is independent;

e) make recommendations to the Board on re-appointment of Board and Board committee members; and

f) review of training and professional development programs for the Board.

During the financial year, the NC held one (1) meeting and had on various occasions used circular resolutions in writing to resolve certain decisions which are then recommended to the Board. The NC had reviewed the nominations for the appointments of those directors that were appointed during the financial year for recommendation to the Board to approve the appointments. In arriving at their decisions on the new appointments, the NC took into consideration the incumbents’ academic qualifications, experience, their individual field of expertise and their potential contributions to the effectiveness of the Board. The NC also met and determined the independence of the Directors is in line with the undertakings described in the CG Code 2012. It also reviewed the composition of the Board and the Board Committees in relation to the needs of the Group.

The NC is of the opinion that the Board is able to exercise objective judgment on corporate affairs independently and no individual or small group of individuals dominates the Board’s decision making process.

The NC assesses and recommends to the Board whether retiring Directors are suitable for re-election.


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During the financial year under review, the NC has ascertained that all Directors, including those who have multiple board representations, have devoted sufficient time and attention to the Group’s affairs and have discharged their duties and responsibilities adequately. As time requirements of each director are subjective, the NC has decided not to fix a maximum limit on the number of directorships a director can hold. The NC considers that the multiple board representations held presently by its Directors do not impede their respective performance in carrying out their duties to the Company.

The list of current directorships in other listed companies and/or other principal commitments held by the respective Directors are set out on pages 47 of this Annual Report.

One of the duties of the NC is to assess the qualifications of the appointed alternate directors to the Board. The Alternate Directors of the current Board are:

Li Man Alternate to Wang Yu HangOuyang Chao Mei Alternate to Liang Yan Feng

All appointed Alternate Directors are based in Singapore and are familiar with the Group’s affairs and qualified to bear all the duties and responsibilities of their respective principal directors, who are principally based in the People’s Republic of China.

The NC has also recommended that the following directors be nominated for re-election at the forthcoming AGM:

a) Mr Wang Yu Hang pursuant to Article 98; and

b) Mr Er Kwong Wah pursuant to Article 98.

Mr Tom Yee has indicated that he will not be seeking re-election as a Director of the Company and will retire at the conclusion of the AGM. Upon Mr Tom Yee’s retirement, he will cease as Chairman of the Audit Committee and a member of the Enterprise Risk Management, Nominating, Remuneration and Strategy Development Committees.

In making the recommendation, the NC has considered the directors’ overall contributions and performance. The Board recommends the shareholders to approve the re-election of the said directors. The details of the proposed resolutions are stipulated in the Notice of AGM.


CORPORATEGOVERNANCE


BOARD PERFORMANCE Principle 5

A formal assessment process is in place to assess the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board. The NC uses objective and appropriate quantitative and qualitative criteria to assess the performance of the Board as a whole and the contribution of each Director to the effectiveness of the Board. Assessment parameters include evaluation of the Board’s access to information, risk management, accountability, the Board’s performance in relation to discharging its principal functions, communication with management and stakeholders, the business performance of the Company, the quality of Board processes, the attendance records of the Directors at Board and Committee meetings and the level of participation at such meetings.

The evaluation of the Board is conducted annually. As part of the process, the Directors will complete appraisal forms which are collated by the Company Secretary. The Company Secretary will then review the results of the appraisal and present the results to the Chairman of the NC who will then present a report to the Board.

An individual assessment of each Director is also undertaken annually. The process of the assessment is through self-assessment where each Director will complete appraisal forms which are collated by the Company Secretary. The Company Secretary consolidates the appraisal forms and presents the results to the Chairman of the NC who will then present a report to the Board.

The NC has assessed the current Board’s performance to-date, as well as the performance of each individual Director and is of the view that the performance of the Board as a whole and each individual Director were satisfactory.

ACCESS TO INFORMATION Principle 6

The Board is provided with relevant financial, operational, compliance, information technology and other management information regularly on a quarterly basis to help them carry out their responsibilities effectively. In addition, all relevant information on material events and transactions are circulated to Directors as and when they arise.

All Board members have separate and independent access to the advice and services of the Company Secretary. The Company Secretary attends all Board and Board committees meetings during the financial year. He is responsible for ensuring that Board procedures are followed and that applicable rules and regulations such as the SGX-ST Listing Manual (“Listing Manual”), Companies Act (Chapter 50), Securities and Futures Act (Chapter 289) and the Constitution of the Company and all governance matters are complied with. The appointment and the removal of the Company Secretary are subject to the Board’s approval.

All Board members also have separate and independent access to the senior management of the Company and the Group. Board members are aware that they, whether as a group or individually, in the furtherance of their duties, can take independent professional advice, if necessary, at the Company’s expense.


CORPORATEGOVERNANCE


B. REMUNERATION MATTERS

PROCEDURES FOR DEVELOPING REMUNERATION POLICIES Principle 7

REMUNERATION COMMITTEE

The Remuneration Committee (“RC”) comprises five Directors, majority of whom including the Chairman is independent. The RC members are as follows:

Er Kwong Wah (Chairman) Non-Executive Independent Gu Jing Song Non-Independent ExecutiveTom Yee Lat Shing Non-Executive Lead Independent Wang Kai Yuen Non-Executive Independent Ang Swee Tian Non-Executive Independent

The principal functions of the RC are to:

a) recommend to the Board base salary level, benefits and incentive programmes, and identify components of salary which can best be used to focus management staff on achieving corporate objectives;

b) approve the structure of compensation programme (including but not limited to Directors’ fees, salaries, allowances, bonuses, options, shares-based incentives & awards and benefits in kind) for the Directors and senior management to ensure that the programme is competitive and sufficient to attract, retain and motivate senior management of the required quality to run the Company successfully;

c) review, on annual basis, the compensation package of the Company’s Directors and senior management personnel and determine appropriate adjustments;

d) review the Company’s obligations arising in the event of termination of EDs and key management personnel contracts of service to ensure that such contracts of service contain fair and reasonable termination clauses which are not overly generous; and

e) administer the COSCO Group Employees’ Share Option Scheme 2002.

The RC meets to discuss the performance assessment of the Executive Directors as well as to discuss the level of emoluments to pay.

The recommendations for approval of the remuneration of the Executive Directors are forwarded to the Board. The RC also reviews and approves the remuneration of senior management.

Directors’ fees are recommended by the RC and are submitted for endorsement by the Board. Directors’ fees are subjected to approval by shareholders at the AGM.


CORPORATEGOVERNANCE


LEVEL AND MIX OF REMUNERATION Principle 8

In reviewing the remuneration packages of the Executive Directors, the RC takes into account the respective performance of the Group and the individual. In its deliberation, the RC takes into consideration, remuneration packages and employment conditions within the industry and benchmarked against comparable companies. The RC ensures the level and structure of remuneration of the key management personnel aligned with the long-term interest and risk policies of the Company as well as attract, retain and motivate them to provide good stewardship and management the operations to the meet the desire objective of the Company.

Non-Executive Independent Directors are paid a basic fee for their responsibilities as Independent Directors and servicing various committees. Such fees are approved by the shareholders of the Company as a lump sum payment at the AGM.

The Company currently adopts a remuneration policy for staff consisting of a fixed component and a variable component. The fixed component is in the form of a base / fixed salary. The variable component is in the form of a variable bonus that is linked to the Company and individual performance. Another element of the variable component is the grant of share options under the COSCO Group Employees’ Share Option Scheme 2002 with the last date of exercise of share option on 23 March 2018.

Information on the COSCO Group Employees’ Share Option Scheme 2002 such as size of grants, exercise price of options that were granted as well as outstanding and vesting period of options are set out on pages 76 to 77 of the Annual Report.

During the financial year, the RC held one (1) meeting. The issues deliberated at the meeting and through the circular resolutions in writing included reviewing the termination of options granted, extension of exercise period of options granted, the bonus payments to key management personnel and the compensation programme for the Directors and key management personnel.


CORPORATEGOVERNANCE


DISCLOSURE ON REMUNERATION Principle 9

DIRECTORS’ AND KEY MANAGEMENT PERSONNEL REMUNERATION

The Directors’ and the top three key management personnel’s remuneration table for the financial year ended 31 December 2017 is as follows:

Fees (%)

Salary (%)

Bonus (%)

Other Benefits (%)

Total (%)

Non-Independent Executive Directors in the Band of below S$500,000Gu Jing Song – 46 – 54 100Li Xi Bei – 61 – 39 100

Non-Independent and Non-Executive Directors in the Band of below S$500,000Ouyang Chao Mei* – 66 15 19 100

Independent Directors in the Band of below S$500,000Tom Yee Lat Shing 100 – – – 100Wang Kai Yuen 100 – – – 100Er Kwong Wah 100 – – – 100Ang Swee Tian 100 – – – 100

* The salary, bonus and other benefits of the incumbent director are paid by a subsidiary.

Fees (%)

Salary (%)

Bonus (%)

Other Benefits (%)

Total (%)

Executives in the Band of below S$500,000

Li Man – 66 1 33 100

Ma Hong Han1 – 49 – 51 100

Wang Kang Tian2 – 57 – 43 100

Wong Meng Yun3 – 74 7 19 100

Note:

1. Mr Ma Hong Han resigned as Chief Financial Officer on 9 May 2017.

2. Mr Wang Kang Tian was appointed as Chief Risk Officer and Chief Financial Officer on 14 November 2017.

3. Mr Wong Meng Yun retired as Financial Controller on 15 January 2018.


CORPORATEGOVERNANCE


The Company does not disclose the remuneration of each individual director to the nearest thousand dollars and the aggregate remuneration of the top three key management personnel in accordance with the Principle 9.2 and 9.3 of the 2012 CG Code respectively, as the Board of Directors believes that it is not in the best interest of the Company to fully disclose such information given the highly competitive industry conditions for ship building and offshore marine engineering sectors particularly in the Peoples’ Republic of China.

The Company disclosed the upper bands for Directors and the top four key management personnel as “Below S$500,000”, which is not in bands of S$250,000, as the Board believes that it is not in the best interest of the Company to make such disclosure given the highly competitive industry conditions.

None of the employees of the Company and its subsidiary companies was an immediate family member of a director and whose remuneration exceeded S$50,000 during the financial year ended 31 December 2017.

EXECUTIVES’ REMUNERATION

The Company adopts a remuneration strategy that supports a pay-for-performance philosophy. The Company has key performance indicator to link with Company’s performance and shareholders’ returns. Executives participate in an annual performance review process that assesses the individual’s performance and contributions.

The remuneration structure for the President and other key management personnel consists of the following components:

l SALARY

Fixed pay comprises basic salary and the Company’s contribution towards the Singapore Central Provident Fund where applicable.

l BONUS

Bonus is paid based on the Company’s and individual’s performance.

l OTHER BENEFITS

Other benefits comprise of usage of Company’s car and other benefits-in-kind.

l STOCK OPTION

The COSCO Group Employees’ Share Option Scheme 2002, approved by members of the Company on 8 May 2002, had expired on 8 May 2012. The share options have been granted to align the president and key management’s interest with that of shareholders. The options granted to them are made reference to the desired remuneration structure target and valued based on the Binomial Valuation Model. Details of the share option scheme can be found in the “Directors’ Report” section of the Annual Report.


CORPORATEGOVERNANCE


C. ACCOUNTABILITY AND AUDIT

ACCOUNTABILITY Principle 10

The Board has overall responsibility to shareholders for ensuring that the Group is well managed and guided by its strategic objectives. In presenting the Group’s annual and quarterly financial results to shareholders, the Board aims to provide shareholders with a balanced and understandable assessment of the Group’s performance, position and prospects. Management provides the Board with management accounts and other financial statements on a monthly basis or as and when required by the Board. The Board takes adequate steps to ensure compliance with legislative and regulatory requirements, including requirements under the listing rules of the securities exchange.

RISK MANAGEMENT AND INTERNAL CONTROLS Principle 11

The Group maintains a robust and effective system of internal controls, addressing financial, operational, compliance and information technology controls, and risk management systems, for all companies within the Group, but recognises that no internal control system will preclude all errors and irregularities. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders’ investments and the Group’s assets.

The Board is responsible for the governance of risk. The Board ensures that Management maintains sound system of risk management and internal controls to safeguard shareholders’ interests and the Company’s assets, and should determine the nature and extent of significant risks which the Board is willing to take in achieving its strategic objectives.

The Group’s key internal controls include:

a) establishment of risk management policies and systems;

b) establishment of policies and approval limits for key financial and operational matters, and issues reserved for the Board;

c) documentation of key processes and procedures;

d) segregation of incompatible functions which give rise to a risk of errors or irregularities not being promptly detected;

e) maintenance of proper accounting records;

f) safeguarding of assets;

g) ensuring compliance with appropriate legislation and regulations; and

h) engaging qualified and experience persons to take charge of important functions.


CORPORATEGOVERNANCE


Operational risk management measures implemented by the Group include the implementation of safety, security and internal control measures and taking up appropriate insurance coverage.

Details of the Group’s financial risk management measures are outlined on pages 150 to 159 in the Notes to the Financial Statements.

In the course of the year, the AC and the Enterprise Risk Management Committee have reviewed, together with Management and the Internal and External Auditors, the major business risks and effectiveness of the Group’s internal controls, including controls for managing financial, operational, compliance and information technology controls and risk management, operational, compliance and information technology controls and risk management systems. Internal Control Standards are set with the objective of providing reasonable assurance that risks are effectively managed by the Group.

The Board has also received assurance from the President and Chief Financial Officer that the financial records as at 31 December 2017 have been properly maintained and the financial statements for the financial year under review give a true and fair view of the Company’s operations and finances and regarding the adequacy and effectiveness of the Company’s risk management and internal control systems.

Based on the work performed by the internal and external auditors, the Group’s framework of management control, the review procedures established and maintained by the Company to monitor the key controls and procedures and to ensure their effectiveness, the annual reviews performed by the management, Board committees and the Board, the Board, with the concurrence of the AC and Enterprise Risk Management Committee, is of the view that the Group’s framework of internal controls in relation to the financial, operational, compliance and information technology controls and risk management system is effective and adequate as at 31 December 2017 to provide reasonable assurance of the integrity and effectiveness of the Company in safeguarding its assets and shareholders’ value.

The Board notes that the system of internal controls and risk management put in place by the Group provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that could be reasonably foreseen. In this regard, the Board also notes that no system of controls and risk management can provide absolute assurance against irregularities especially those arising from poor judgment in decision making, human error and fraud.

ENTERPRISE RISK MANAGEMENT COMMITTEE

The Enterprise Risk Management Committee (“ERMC”) comprises nine members, majority is Non-Executive and the Chairman is independent. The ERMC members are:

Ang Swee Tian (Chairman) Non-Executive IndependentGu Jing Song Non-Independent ExecutiveLi Xi Bei Non-Independent ExecutiveTom Yee Lat Shing Non-Executive Lead IndependentWang Kai Yuen Non-Executive Independent Er Kwong Wah Non-Executive Independent Liang Yan Feng Non-Independent and Non-ExecutiveWang Kang Tian Chief Financial Officer and Chief Risk OfficerOuyang Chao Mei Managing Director of COSCO (Singapore) Pte Ltd


CORPORATEGOVERNANCE


The ERMC assists the Board in fulfilling its oversight responsibilities on risk management framework and policies. The responsibilities of the ERMC include the following:

a. reviews the overall risk management systems and process and makes recommendations on changes as and when considered appropriate;

b. reviews the Group’s risk policies, guidelines and limits; and

c. reviews periodically the Group’s material risk exposures and evaluates the adequacy and effectiveness of the mitigating measures implemented by management.

The ERMC has delegated the day-to-day management of risk within the Group to the Risk Management Committee (“RMC”) of each of its operating subsidiaries. The RMC of each of the subsidiary comprises senior management staff of each division within the operating subsidiaries.

The ERMC has conducted four (4) meetings during the year at which discussions were held on the establishment of new risk management policies, the existing risk management structure, the key risk exposures of the Group and the action plans to mitigate such risks.

AUDIT COMMITTEE Principle 12

The Audit Committee (“AC”) comprises all independent directors of the Company, as follows:

Tom Yee Lat Shing (Chairman) Non-Executive Lead IndependentWang Kai Yuen Non-Executive IndependentEr Kwong Wah Non-Executive Independent Ang Swee Tian Non-Executive Independent

The Board is satisfied with the composition of the AC and the AC members are appropriately qualified to discharge their responsibilities. All members of the AC have recent and relevant accounting or related financial management expertise or experience, as the Board interprets such qualification in its business judgment. By briefings given by the External Auditors, the AC and Management are always kept abreast of changes to accounting standards and issues which have a direct impact on financial statements. AC members will also attend trainings regarding the new accounting standards as and when such need arises.

The AC performs the following functions:

a) reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss;

b) reviews with the internal auditors, their audit plan, the adequacy of the internal audit procedures and their evaluation of the effectiveness of the overall internal control systems, including financial, operational, compliance and information technology controls and risk management systems;

c) reviews the quarterly and annual financial statements, including announcements to shareholders and the SGX-ST prior to submission to the Board so as to ensure the integrity of the Company’s financial statements;

d) reviews any significant findings and recommendations of the external and internal auditors and related management response and assistance given by the management to auditors;


CORPORATEGOVERNANCE


e) reviews interested person transactions to ensure that internal control procedures approved by the shareholders are adhered to;

f) conducts annual review of the independence and objectivity of the external auditors, including the volume of non-audit services provided by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination; and

g) reviews the qualifications of the candidate(s) for chief financial officer before recommending such appointment to the Board.

The AC and the Board of Directors, with the assistance of internal and external auditors, reviews the effectiveness of the key internal controls, including financial, operational, compliance, information technology controls and risk management systems on an on-going basis. There are formal procedures in place for both the internal and external auditors to report independently their findings and recommendations to the AC.

The AC has full access to, and cooperation from the Management including internal and external auditors, and has full discretion to invite any Director or executive officer to attend its meetings. The AC has also expressed power to investigate any matter brought to its attention, within its terms of reference, with the power to retain professional advice at the Company’s expense.

The Group recognises the importance of the internal audit function which, being independent of Management is one of the principal means by which the AC is able to carry out its responsibilities effectively. The Company has appointed Messrs Deloitte & Touche Enterprise Risk Services Pte. Ltd. as the outsourced internal auditors of the Group.

The internal auditors plan their internal audit schedules in consultation with the Management and submit their respective plans to the AC for approval. The Internal Auditors report directly to the AC and the AC will then escalate the IA report to the Board as part of their oversight role.

The AC conducts regular meetings scheduled on a quarterly basis. Apart from the quarterly meetings, the AC meets with the external and internal auditors, without the presence of the management at least once a year. Ad-hoc meetings may be carried out from time to time, as circumstances require. The AC held six (6) meetings during the financial year.

After reviewing the non-audit services provided by the external auditors, PricewaterhouseCoopers LLP to the Group, the AC is satisfied with the independence and objectivity of the external auditors and recommends to the Board of Directors, the nomination of the external auditors for re-appointment.

The fee paid to PricewaterhouseCoopers LLP for audit and non-audit services for the financial year ended 31 December 2017 are S$1,210,000 and S$695,000 respectively.

The Company complies with Rules 712 and 715 of the Listing Manual of the Singapore Exchange Securities Trading Limited in relation to appointing appropriate auditing firm based in Singapore to audit its accounts, and its Singapore-incorporated subsidiaries and significant associated companies.

AC’s commentary on key financial reporting matters

The AC has discussed significant financial reporting matters with management and the external auditors which have included as key audit matters (“KAMs”) in the independent auditors’ report for the financial year ended 31 December 2017, as set out on page 80 to 83 of this Annual Report.


CORPORATEGOVERNANCE


In assessing each KAM, the AC took into consideration the approach and methodology applied by management in the valuation of assets, as well as the reasonableness of the estimates and key assumptions used. The AC also considered the report from the external auditors, including their findings and views on the key areas of audit focus. The AC concluded that the Group’s accounting treatment and estimates in each of the KAMs were appropriate.

Whistle-blowing Policy

The Company has in place a whistle-blowing policy and arrangements by which staff may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters. To ensure independent investigation of such matters and for appropriate follow-up action, all whistle-blowing reports are to be sent to the internal audit function. The AC, President and Chief Financial Officer of the Company will be informed immediately of all whistle-blowing reports received.

Details of the whistle-blowing policy and arrangements are given to all staff for their easy reference. New staff is briefed on these during the orientation programme.

INTERNAL AUDIT Principle 13

The AC reviews the adequacy and effectiveness of the internal audit function annually. The internal audit function’s primary line of reporting is to the Chairman of the AC. Internal Audit is an independent function within the Company. Internal Auditors report directly to the AC and administratively to the President. The Company has appointed Messrs. Deloitte & Touche Enterprise Risk Services Pte. Ltd. as the internal auditors of the Group. The internal auditors have unfettered access to all the Company’s documents, records, properties and personnel, including access to the AC.

The AC is satisfied with the independence and objectivity of the outsourced Internal Auditors and believes that they have appropriate standing to perform their functions effectively.

D. SHAREHOLDER RIGHTS AND RESPONSIBILITIES

SHAREHOLDER RIGHTSPrinciple 14

COSCO treats all shareholders fairly and equitably, and recognises, protects and facilitates the exercise of shareholders’ rights and continually reviews and updates such governance arrangements. The Company strives for timeliness and transparency in its disclosures to the shareholders and the public. All information on the Company’s new initiatives will be disseminated via SGXNET to ensure fair communication with the shareholders and the public.

COMMUNICATION WITH SHAREHOLDERS Principle 15

The Company has put in place an investor relations policy to promote regular and effective communication with shareholders. All questions raised by the shareholders would be escalated to and addressed by the Senior Management, General Manager of Investor Relations and / or relevant person-in-charge.


CORPORATEGOVERNANCE


All announcements will be disseminated via SGXNET timely in accordance with the Listing Manual. The Company currently holds media and analyst briefings upon the release of its quarterly financial results. Management regularly receives visiting fund managers to provide them an insight to the Company’s business and developments, as well as to better understand and address their concerns. In addition to the media and analyst briefings, the Company has taken part in various investor conferences. This allows the Board to understand the view of the shareholders about the Company.

The Company does not practise selective disclosure. Price-sensitive information is first publicly released via SGXNET, before the Company meets with any group of investors or analysts. Subsequently, all released announcements will be uploaded to the Company’s website at www.cosco.com.sg. Where there is inadvertent disclosure made to a select group, the Company ensures it would make the same disclosure publicly to others as promptly as possible.

All quarterly and full year results announcements, annual reports, dividend declaration and notice of book closure are announced via SGXNET or issued within the prescribed period under Listing Manual.

DIVIDEND POLICY

The Company does not have a specific dividend policy. Nonetheless, the Management after reviewing the performance of the Company in the relevant financial period will make appropriate recommendation to the Board. Any dividend declaration will be communicated to shareholders via announcement through SGXNET.

The Board has resolved not to recommend payment of dividend for the financial year ended 31 December 2017 as the Company was evaluating various strategic moves to expand its businesses.

CONDUCT OF SHAREHOLDER MEETINGS Principle 16

COSCO SHIPPING encourages shareholders to participate actively in general meetings. At general meetings of the Company, shareholders are given the equitably opportunity to participate effectively in and vote at the meeting and express their views and ask questions regarding the Company and the Group. The Company Secretary is present to brief the attendees the rules governing general meetings, including voting procedures, upon request by the shareholder. The proceeding of the AGM is properly recorded, including all comments or queries from shareholders relating to the agenda of the meeting and responses from the Board and Management. All minutes of general meetings are opened to the inspection of shareholder within one month after the general meeting was held when requested by any shareholder.

The Company’s Constitution allow a shareholder entitled to attend and vote to appoint a proxy who need not be a shareholder of the Company to attend and vote at the meetings.

The Board members and chairpersons of the Audit, Nominating, Remuneration, Enterprise Risk Management and Strategic Development Committees are present and available to address shareholders’ questions at general meetings. The external auditors are also present to address shareholders’ queries relating to the conduct of the audit and the preparation and content of the auditors’ report.

All resolutions at the Company’s general meetings will be voted on by way of poll to better reflect shareholders’ shareholding interest. This is made pursuant to the Rules 730A (2) of the Listing Manual of the Singapore Exchange Securities Trading Limited. The poll results will be announced to the shareholders at each respective general meeting after tabulation of the poll.


CORPORATEGOVERNANCE


E. INTERESTED PERSON TRANSACTIONS (“IPTS”) POLICY

Our ultimate holding Company, China COSCO Shipping Corporation Limited, is a state-owned enterprise under the State-owned Assets Supervision and Administration Commission (“SASAC”) of the State Council (the “State Council”) of the People’s Republic of China (“PRC”). SASAC is a governmental entity in the PRC under the direct leadership and supervision of the State Council and exercises its functions by virtue of PRC law. It is responsible for the supervision, guidance and monitoring of the enterprises under its supervision. SASAC also despatches supervisory panels to supervise different state-owned enterprises on behalf of the State Council and promulgates guidelines and policies with respect to the management of state-owned property. Nevertheless, as provided under the applicable PRC law, SASAC does not interfere in the daily operations of the state-owned enterprises it supervises. As SASAC exercises its supervisory functions pursuant to, and as required by, the laws of the PRC on behalf of the State Council, SASAC is not regarded as an interested person with respect to the Company.

The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions with the China COSCO Shipping Corporation Limited and its associates, which are covered by a Shareholders’ Mandate approved at each general meeting.

The AC reviews the Shareholders’ Mandate at regular intervals, and is satisfied that the review procedures for IPTs and the reviews to be made periodically by the AC in relation thereto are adequate to ensure that the IPTs will be transacted on normal terms and will not be prejudicial to the interests of the Company and its minority shareholders.

Name of interested person

Aggregate value of all interested person

transaction during the financial period under

review (excluding transactions less

than $100,000 and transactions conducted

under shareholders’ mandate pursuant to

Rule 920)


transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding

transactions less than $100,000)

S$’000 S$’000Between Subsidiaries and:Bridge Line Co., Ltd – 582Chimbusco Zhoushan Branch – 4,825China Marine Bunker (Dalian) Co., Ltd – 9,257China Marine Bunker Guangzhou Co., Ltd – 1,037China Ocean Shipping (Group) Company – 841China Shipping - Vastwin Engineering & Logistic Co., Ltd. – 685

China Shipping Bulk Carrier Co., Ltd 353 1,756China Shipping Industry (Guangzhou) Co., Ltd – 4,671China Shipping Industry (Jiangsu) Co., Ltd – 1,792China Shipping Industry (Shanghai Changxing) Co., Ltd

– 11,521

China Shipping Tanker Company Limited – 3,753


CORPORATEGOVERNANCE


Name of interested person


transaction during the financial period under

review (excluding transactions less than

$100,000 and transactions conducted under

shareholders’ mandate pursuant to Rule 920)


transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding

transactions less than $100,000)

S$’000 S$’000(Continued)Cosco (Cayman) Mercury Co., Ltd – 310Cosco (HK) Insurance Brokers Ltd – 145Cosco (HK) Investment & Development Co., Ltd

– 8,740

Cosco (HK) Shipping Co., Ltd – 4,388Cosco Bulk Carrier Co., Ltd – 3,846Cosco Bulk Tianjin Forwarding Co., Ltd – 229Cosco-Feoso (S) Pte Ltd 103 –Cosco Finance Co., Ltd – 717,830COSCO Kansai Paint & Chemicals Co., Ltd – 530Cosco Logistic (GZ) Heavy Transportation – 253Cosco Logistics (Shanghai) Heavy Haulage Co., Ltd

– 3,254

Cosco Petroleum Pte Ltd – 1,491Cosco Shipping (South East Asia) Pte Ltd [1] 13,953 –Cosco Shipping Bulk Co., Ltd – 853Cosco Shipping Development Co., Ltd 751 1,677Cosco Shipping Ferry Co., Ltd – 119Cosco Shipping Lines Co., Ltd – 7,159Cosco Shipping Logistics Co., Ltd – 184Cosco Shipping Logistics Dalian Co., Ltd. – 343Cosco Shipping Specialized Carriers Co., Ltd – 9,938Cosco Shipping Tanker (Dalian) Co., Ltd 702 1,776Cosco Shipping Tanker (Shanghai) Co., Ltd 104 1,394Cosco Shipping Asphalt (Hainan) Co., Ltd(formerly known as “Cosco Southern Asphalt Shipping Co., Ltd”)

– 225

Dapengwan Maritime Company Limited – 377Mulanwan Maritime Company Limited – 308Nantong Chimbusco Marine Bunker Co., Ltd – 1,550Nantong Cosco Heavy Industry Co., Ltd – 3,661Qingdao Manning Co-operation Ltd – 2,125Qingdao Ocean Shipping Company – 1,010Refined Success Limited – 124SDIC Shipping Development Co., Ltd – 414Shanghai Ocean Crew Co., Ltd – 2,304Yueliangwan Maritime Co., Limited – 315

Total [2] 15,966 817,592


CORPORATEGOVERNANCE


Notes:

[1] This relates to the proposed acquisition of 40% of the issued shares of the issued and paid-up share capital of PT. Ocean Global Shipping by the Company for a consideration of S$13,953,370.86 payable in cash pursuant to a Share Sale and Purchase Agreement entered into by the Company with COSCO Shipping (South East Asia) Pte Ltd on 3 November 2017.

[2] The above transactions do not include the disposal of 51% equity interest in COSCO Shipyard Group Co., Ltd., 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd. and 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. for an aggregate consideration of RMB1,465,822,955.00 (equivalent to approximately S$301.0 million) which was approved by shareholders on 30 August 2017.

As at 31/12/2017 As at 31/12/2016S$’000 S$’000

Balances placed with a fellow subsidiary, Cosco Finance Co., Ltd :- Cash at bank – 323,576- Short-term bank deposits – 1,248

– 324,824

Loan from a fellow subsidiary, COSCO Finance Co., Ltd –

294,729

F. DEALING IN SECURITIES

In line with Chapter 12 Rule 1207(19) of the Listing Manual on dealings in securities, the Company has adopted an internal compliance code which provides guidance to its Directors and officers in relation to dealings in its securities.

The Listing Manual prohibits securities dealings by the Directors and employees while in possession of price-sensitive information. The Management should not deal in the Company’s shares on short-term considerations. The Company issues regular circulars to its Directors, principal officers and relevant officers who have access to unpublished material price-sensitive information to remind them of the aforementioned prohibition and to remind them of the requirement to report their dealings in shares of the Company. The Directors and employees are also prohibited from dealing in the securities of the Company during the period commencing two weeks before the announcement of financial results of the Company for each of the first, second and third quarters of its financial year or one month before the announcement of the Company’s full year financial statements.


CORPORATE INFORMATION


Board of DirectorsWang Yu HangChairman and Non-Independent Non-Executive Director

Gu Jing SongVice Chairman, President and Non-Independent Executive Director

Li Xi BeiNon-Independent Executive Director

Liang Yan Feng Non-Independent Non-Executive Director

Tom Yee Lat ShingNon-Executive Lead Independent Director

Wang Kai YuenNon-Executive Independent Director

Er Kwong WahNon-Executive Independent Director

Ang Swee TianNon-Executive Independent Director

Alternate DirectorsLi ManAlternate to Wang Yu Hang

Ouyang Chao MeiAlternate to Liang Yan Feng

Audit CommitteeTom Yee Lat Shing Chairman

Wang Kai YuenEr Kwong WahAng Swee Tian

Remuneration CommitteeEr Kwong Wah Chairman

Gu Jing SongTom Yee Lat ShingWang Kai YuenAng Swee Tian

Nominating CommitteeWang Kai Yuen Chairman

Gu Jing SongTom Yee Lat ShingEr Kwong WahAng Swee Tian

Enterprise RiskManagement CommitteeAng Swee Tian Chairman

Gu Jing SongLi Xi BeiTom Yee Lat ShingWang Kai YuenEr Kwong WahLiang Yan FengWang Kang TianOuyang Chao Mei

Strategic Development CommitteeGu Jing SongChairman

Wang Yu HangTom Yee Lat ShingWang Kai YuenEr Kwong WahAng Swee Tian

Registered Officeand Business ContactInformation30 Cecil Street#26-01 Prudential TowerSingapore 049712Telephone: 6885 0888Facsimile: 6885 0858Website: www.cosco.com.sg

Company RegistrationNumber196100159G

AuditorsPricewaterhouseCoopers LLP7 Straits ViewMarina One, East Tower, Level 12 Singapore 018936Partner-in-charge:Tham Tuck Seng (since FY2015)

Company SecretaryTan Wee Sin

Share Registrar and Share Transfer OfficeTricor Barbinder ShareRegistration Services(A division of Tricor Singapore Pte Ltd)80 Robinson Road#11-02Singapore 068898Telephone: 6236 3333Facsimile: 6236 3405


BOARD OF DIRECTORS

Chairman and Non-Independent Non-Executive Director

Vice Chairman, President and Non-Independent Executive Director

Non-Independent Executive Director

Non-Independent Non-Executive Director

Non-Executive Lead Independent Director

Non-Executive Independent Director

Non-Executive Independent Director Non-Executive Independent Director

MR GU JING SONGMR WANG YU HANG MR LI XI BEI

MR TOM YEE LAT SHING

MR ER KWONG WAH MR ANG SWEE TIAN

MR LIANG YAN FENG DR WANG KAI YUEN



BOARD OF DIRECTORS

Mr Wang Yu Hang was appointed as the Chairman and Non-Independent and Non-Executive Director of the Company with effect from 19 January 2016. He was appointed as Deputy General Manager of China COSCO Shipping Group in January 2016.

From September 1979 to September 1983, Mr Wang studied in the marine engineering department of Dalian Maritime University. He started his career in Tianjin Ocean Shipping Company after graduation.

From June 1987 to November 1999, Mr Wang was working in China Ocean Shipping (Group) Company and had taken various posts including Deputy General Manager of Development Division, Deputy General Manager of Human Resources Division, General Manager of Supervision Division, Deputy Director of Discipline Inspection Commission, Director of Legal Office and General Manager of Human Resources Division.

From February 2000 to February 2014, Mr Wang was Executive Vice President and Acting President of COSCO Americas Inc., Deputy General Manager and General Manager of COSCO Shipbuilding Industry Company, and Managing Director of COSCO Shipyard Group Co. Ltd. In February 2014, Mr Wang was appointed as Executive Vice President of COSCO Group.

With over 30 years’ expertise in shipping industry, Mr Wang Yu Hang has rich experiences in human resources development, discipline inspection and corporate management. Mr Wang obtained his bachelor’s degree in marine engineering and he is a senior engineer.

Mr Gu Jing Song was appointed Vice Chairman, President and Non-Independent Executive Director on 30 August 2016.

Mr Gu brings a wealth of experience and knowledge in corporate management to his current role. Prior to his current appointment, Mr Gu was President of China Shipping Regional Holdings Pte Ltd and Managing Director of Golden Sea Shipping Pte Ltd from January 2014 to March 2016. From January 2010 to January 2014, he served as Vice President of China Shipping (Hong Kong) Holdings Co. Ltd, Deputy General Manager of China Shipping Container Lines (Hong Kong) Asia Co. Ltd, Managing Director of China Shipping Container Lines (Hong Kong) Agency Co Ltd and Managing Director of Rich Shipping Company Limited.

Mr Gu started his career in 1991 with Dalian Marine Transportation Co. in the Shipping and General Affairs Divisions. He holds a Bachelor of Arts in Foreign Languages Department from Shanghai Maritime University.

MR WANG YU HANGChairman and Non-Independent Non-Executive Director

MR GU JING SONGVice Chairman, President and Non-Independent Executive Director

Chairman and Non-Independent Non-Executive Director

Vice Chairman, President and Non-Independent Executive Director

Non-Independent Executive Director

Non-Independent Non-Executive Director

Non-Executive Lead Independent Director

Non-Executive Independent Director

Non-Executive Independent Director Non-Executive Independent Director



Mr Li Xi Bei was appointed Non-Independent Executive Director on 30 August 2016.

Mr Li brings to his current role extensive experiences in human resources development, discipline inspection and corporate management. Prior to his current appointment, Mr Li was Manager, Deputy General Manager and then General Manager in Supervision Division of China Ocean Shipping (Group) Company from June 2001 to March 2016. He has been Vice President of COSCO Holdings (Singapore) Pte Ltd since March 2016.

Mr Li served as Deputy Manager and Manager in Personnel Division of COSCO Industry Company from January 1998 to June 2001. He was Deputy Section Chief and Section Chief in Human Resources Division of China Ocean Shipping (Group) Company from March 1994 to January 1998. Prior to that, he was working in Personnel Division of China Ocean Shipping Company and COSCO Manning Cooperation Inc. from November 1990 to March 1994.

Mr Li started his career in 1979 onboard ships of Guangzhou Ocean Shipping Company. He graduated from Naval Academy of Engineering and specialised in Engineering Management.

Mr Liang Yan Feng was appointed as a Non-Independent and Non-Executive Director of the Company with effect from 8 July 2014.

Mr Liang started his career with COSCO in July 1991. In early years, he had worked as a deputy section manager, section manager and deputy general manager in human resources division of COSCO Group head office.

From November 1997 to September 2000, Mr Liang was Managing Director of COSCO Human Resources Development Company. From September 2000 to August 2005, he was General Manager of asset operation division in COSCO Group head office. From March 2006 to December 2009, he was Deputy General Manager and Managing Director of COSCO International Holdings Ltd. After that, he was Vice President of COSCO (Hong Kong) Group Ltd and Deputy Managing Director of Dalian Ocean Shipping Company.

In May 2014, Mr Liang Yan Feng was appointed President of COSCO Shipyard Group Co. Ltd.

Mr Liang graduated from Tsinghua University with a bachelor’s degree and an EMBA degree.

MR LI XI BEINon-Independent Executive Director

MR LIANG YAN FENGNon-Independent Non-Executive Director

BOARD OF DIRECTORS



Mr Tom Yee Lat Shing was appointed to the Board on 16 November 1993. He is a Non-Executive Lead Independent Director and was last re-elected as Director on 22 April 2016. He was appointed as Lead Independent Director effective from 21 February 2014. He is Chairman of the Company’s Audit Committee and member of the Nominating, Enterprise Risk Management, Remuneration and Strategic Development Committees.

Mr Yee is a Singapore Chartered Accountant and was a partner of an international public accounting firm from 1974 to 1989. He has more than 35 years of experience in the field of accounting and auditing and extensive experience in handling major audit assignments of public listed and private companies in various industries, including insurance, manufacturing and retailing. He is currently a consultant.

Mr Yee sits on the boards of several Singapore-listed companies. He is a fellow member of the Institute of Chartered Accountants in Australia, CPA (Australia) and Institute of Singapore Chartered Accountants and an associate member of the Institute of Chartered Secretaries and Administrators. He is also a fellow member of the Singapore Institute of Directors.

Dr Wang Kai Yuen was appointed Non-Executive Independent Director on 2 May 2001. He chairs the Nominating Committee and is a member of the Audit, Enterprise Risk Management, Remuneration and Strategic Development Committee. Dr Wang served as a Member of Parliament for the Bukit Timah Constituency from December 1984 until April 2006. He was the Chairman of Feedback Unit from 2002 until his retirement from politics. He retired as the Centre Manager of Fuji Xerox Singapore Software Centre in December 2009. He graduated from the University of Singapore with a First Class Honours degree in Electrical and Electronics engineering.

Dr Wang holds a Master of Science in Electrical Engineering, a Master of Science in Industrial Engineering and a PhD in Engineering from Stanford University, USA. He received a Friend of Labour Award in 1988 for his contributions to the Singapore labour movement.

MR TOM YEE LAT SHINGNon-Executive Lead Independent Director

DR WANG KAI YUENNon-Executive Independent Director

BOARD OF DIRECTORS



Mr Er Kwong Wah was appointed Non-Executive Independent Director on 20 December 2002. He chairs the Remuneration Committee and is a member of the Audit, Nominating, Enterprise Risk Management and Strategic Development Committee. A Colombo Plan and Bank of Tokyo Scholar, Mr Er obtained a first class honours degree in Electrical Engineering at the University of Toronto, Canada, in 1970 and an MBA from the Manchester Business School of the University of Manchester, UK in 1978.

Mr Er spent 27 years in the Singapore Civil Service and served in various departments including the Ministry of Defence, Public Service Commission, Ministry of Finance, Ministry of Education and Ministry of Community Development. He was Permanent Secretary in the Ministry of Education from 1987-1994, and then in the Ministry of Community Development until his retirement in 1998. Thereafter, he took up an appointment as Executive Director of a private tertiary college in Singapore and retired from this institution at the end of 2016.

Currently, he is an Independent Director of the Boards of several public listed companies.

For his outstanding service in the Government and in the community, Mr Er was awarded the PPA (E) or Public Administration Medal (Gold), the BBM (Public Service Star) and the PBM (Public Service Medal). In 1991, the Government of France conferred him a National Honour with the award of Commandeur dans l’Ordre des Palmes Academiques.

Mr Ang Swee Tian is a Non-Executive Independent Director of COSCO Corporation (Singapore) Limited. He chairs the Enterprise Risk Management Committee and is a member of the Audit, Remuneration, Nominating and Strategic Development Committees.

Mr Ang was the President of Singapore Exchange Ltd (“SGX”) from 1999 to 2005 during which he played an active role in successfully promoting SGX as a preferred listing and capital raising venue for Chinese enterprises. Mr Ang also played a pivotal role in establishing Asia’s first financial futures exchange, the Singapore International Monetary Exchange (“SIMEX”) in Singapore in 1984 and was instrumental to establishing SGX AsiaClear which started offering OTC clearing facility in 2006. Following his retirement in January 2006, Mr Ang served as Senior Adviser to SGX until December 2007.

In March 2007, Mr Ang became the first person from an Asian Exchange to be inducted into the Futures Industry Association’s Futures Hall of Fame which was established to honour and recognise outstanding individuals for their contributions to the global futures and options industry. Mr Ang graduated from Nanyang University of Singapore with a First-Class Honours Degree in Accountancy in 1970. He was conferred a Master Degree in Business Administration with distinction by the Northwestern University in 1973.

MR ER KWONG WAHNon-Executive Independent Director

MR ANG SWEE TIANNon-Executive Independent Director

BOARD OF DIRECTORS



FURTHER INFORMATION ON BOARD OF DIRECTORSThe list of current directorships in other listed companies held by the respective Directors are as follows:

Director Current directorship in other listed companies

Wang Yu Hang • China International Marine Containers (Group) Ltd (Vice Chairman)

Gu Jing Song Nil

Li Xi Bei Nil

Liang Yan Feng Nil

Tom Yee Lat Shing • Bonvest Holdings Ltd (Non-Executive Director)

• Pacific Century Regional Development Limited (Non-Executive Director)

• Powermatic Data Systems Ltd (Non-Executive Director)

Wang Kai Yuen • China Aviation Oil (Singapore) Corporation Ltd (Deputy Chairman)

• ComfortDelGro Corporation Limited (Director)

• Ezion Holdings Ltd (Chairman)

• HLH Group Ltd (Chairman)

• Emas Offshore Limited (Director)

Er Kwong Wah • CFM Holdings Ltd (Director)

• China Essence Group Ltd (Director)

• China Sky Chemical Fiber Co., Ltd (Director)

• Eucon Holding Ltd (Director)

• GKE Corporation Ltd (Director)

• ecoWise Holding Limited (Director)

• China Environment Ltd. (Director)

Ang Swee Tian • China Aviation Oil (Singapore) Corporation Ltd (Non-Executive Director)

• China JinJiang Environment Holding Company Limited (Non-Executive Director)

BOARD OF DIRECTORS



KEY MANAGEMENT

Mr Gu Jing Song was appointed Vice Chairman, President and Non-Independent Executive Director on 30 August 2016.

Mr Gu brings a wealth of experience and knowledge in corporate management to his current role. Prior to his current appointment, Mr Gu was President of China Shipping Regional Holdings Pte Ltd and Managing Director of Golden Sea Shipping Pte Ltd from January 2014 to March 2016. From January 2010 to January 2014, he served as Vice President of China Shipping (Hong Kong) Holdings Co. Ltd, Deputy General Manager of China Shipping Container Lines (Hong Kong) Asia Co. Ltd, Managing Director of China Shipping Container Lines (Hong Kong) Agency Co Ltd and Managing Director of Rich Shipping Company Limited.

Mr Gu was GM of Commercial Division of China Shipping Container Lines Co Ltd from February 2006 to January 2010, GM of Commercial Division and Asia Pacific Lines Division of China Shipping Container Lines Co Ltd, from October 2004 to February 2006. He was Managing Director of China Shipping UK Agency Co Ltd from May 1999 to October 2004 and Manager of Overseas Department with China Shipping (Group) Co. from June 1997 to June 1999.

Mr Gu started his career in 1991 with Dalian Marine Transportation Co. in the Shipping and General Affairs Departments. He holds a Bachelor of Arts in Foreign Languages Department from Shanghai Maritime University.

Mr Wang Kang Tian was appointed Chief Financial Officer and Chief Risk Officer of the Company in November 2017.

Mr Wang started his career in July 1988 as Vice General Manager of Finance Division of Guangzhou Shipping Company Limited. In July 1997, he joined China Shipping Group Company Limited as General Manager of Finance Division. In July 2002, Mr Wang joined China Shipping Development Company Limited where he served as Chief Financial Officer and Vice President for 14 years.

Prior to his existing appointment at COSCO SHIPPING, Mr Wang was Chief Finance Officer of China COSCO Energy Transportation Company Limited from July 2015 to October 2017.

Mr Wang graduated from Anhui University of Finance and Economics in July 1988 and obtained a Master’s degree in Economics in 2005 from Renmin University of China.

MR GU JING SONGVice Chairman and President

MR WANG KANG TIANChief Financial Officer and Chief Risk Officer



KEY MANAGEMENT

Mr Li Man has rich knowledge and experience in corporate management and business operation.

From July 1993 to October 1997, Mr Li served as a manager in Secretary Division, Executive Offi ce of Tianjin Ocean Shipping Company. From October 1997 to August 1999, Mr Li was Deputy General Manager of Qingdao AIER Food Co. Ltd. From August 1999 to January 2001, he was Deputy General Manager of Executive Office, COSCO Bulk Carrier Co. Ltd. From January 2001 to September 2005, Mr Li served as Deputy General Manager and General Manager of Tianjin Shore-Based Industry Company, COSCO Bulk Carrier Co. Ltd.

From September 2005 to August 2007, Mr Li was Deputy General Manager of Executive Office, China Ocean Shipping (Group) Company. From August 2007 to August 2009, Mr Li served as Vice Governor in Yanbian Korean Autonomous Prefecture, Jilin Province, P.R. China. From October 2009 to October 2012, he was Executive Vice President of BOAO COSCO Co. Ltd.

Mr Li graduated from Dalian Maritime University in July 1993 with a Bachelor’s Degree in Engineering. He received his MBA in July 2002 and Ph.D. in Business Administration and Enterprise Management in May 2009 from Nankai University.

MR LI MANVice President



INVESTOR RELATIONS

COSCO SHIPPING adopts a proactive approach in communicating with its shareholders, investors, analysts and the media about the Company’s operations, performance and outlook to allow the investment community to take an informed perspective of their investment decisions. As such, the Company ensures that all news releases and Company announcements are disclosed to shareholders in a timely, accurate and consistent manner. These materials are made available via the SGX-ST portal and updated on the Company’s website.

During the year, the senior management and investor relations team have remained committed in engaging all stakeholders on COSCO SHIPPING’s new strategies and key developments through multiple communication channels such as the shareholders meeting, analyst briefings, investor conferences and press releases.

Through these events, the Company was able to interact closely with the stakeholders, which was especially crucial during the Company’s transition into logistics business.

The Annual General Meeting (AGM) held every April is also an important avenue for shareholders to meet the Board of Directors and senior management, provide feedback about the Company as well as gain deeper insights into the Company’s business operations.



INVESTOR RELATIONS

Major Investor Relations Events in 2017

Date Organiser Event

24 February 2017 COSCO SHIPPING FY2016 Full Year Results Briefing

24 February 2017 COSCO SHIPPING FY2016 Full Year Results Announcement

20 April 2017 COSCO SHIPPING Annual General Meeting / Extraordinary General Meeting

5 May 2017 COSCO SHIPPING FY2017 1st Quarter Results Briefing

5 May 2017 COSCO SHIPPING FY2017 1st Quarter Results Announcement

4 August 2017 COSCO SHIPPING FY2017 2nd Quarter Results Briefing

4 August 2017 COSCO SHIPPING FY2017 2nd Quarter Results Announcement

30 August 2017 COSCO SHIPPING Extraordinary General Meeting

3 November 2017 COSCO SHIPPING FY2017 3rd Quarter Results Briefing

3 November 2017 COSCO SHIPPING FY2017 3rd Quarter Results Announcement

COSCO vs STI Index



RISK MANAGEMENT

INTRODUCTION

Risk management and internal controls have been the main focus of the various objectives of the Corporate Governance Council (“CG Council”) to raise the standard of corporate governance in its recent Code of Corporate Governance (“CG Code”) revision. In the 2012 CG Code, the CG Council introduced the revised Principle 11 to focus on Risk Management and Internal Controls. Immediately on 10 May 2012, a Risk Governance Guidance for Listed Boards was also released by CG Council. These efforts by CG Council are aimed at providing guidance to listed companies’ boards and management on risk management which aims to ultimately contribute to better and sustained value to investors, raise investor confidence and enhance Singapore’s reputation as a leading and trusted international financial center.

At COSCO SHIPPING International (Singapore) Co., Ltd., the Board of Directors (“Board”) believes that good corporate governance is an effectual balance of promoting the long-term success of the Company and providing accountability and control systems which are symmetric with risks involved. It is essential to facilitate effective, entrepreneurial and prudent management.

The Board has delegated the risk management and internal controls of the Group to an Enterprise Risk Management Committee (“ERMC”). In the ever changing business environment, the risk management process of the Group is constantly reviewed and updated by the ERMC. The risk management process is aiming to identifying the risk factors that may have a material impact on the Group’s operation, and to manage them appropriately.

The Company has adopted an Enterprise Risk Management Policy in August 2012 aims to:

• provide a consistent and structured philosophy and process in managing COSCO’s risks;

• enable a uniform approach in prioritising, managing, monitoring and mitigating COSCO’s risks; and

• establish clear responsibilities, lines of authority, accountabilities and decision making processes.

With the above policy, the risks identification and management have been carried out and placed under the purview of the ERMC.

The material risk factors identified by the Group’s risk management process are set out below. Each of these could have a material and adverse impact on the Group, including its business, financial condition, results of operation and prospect. These risk factors have been divided into three categories: external; internal and financial.

RISK MANAGEMENT PROCESS

The ERMC has delegated the day-to-day management of risk within the Group to the Risk Management Committee (“RMC”) of each of its operating subsidiaries and each RMC comprises senior management staff of the respective division within the operating subsidiaries.

The ERMC also engages Deloitte & Touche Enterprise Risk Services Pte Ltd to perform strategic risk profiling in the Group’s major subsidiaries.



RISK MANAGEMENT

As the Group’s enterprise risk management program is a long-term initiative that calls for commitment and inputs from various stakeholders, the enterprise risk management policies have been implemented in phases with guidance from Deloitte & Touche Enterprise Risk Services Pte Ltd in a systematic manner and coupled with constant education and training of local management staff and risk owners.

The Board conducts periodical reviews of the risks and it identifies the key risks for the year ahead to stay current with the ever-changing operating environment. As part of this review, operational and strategic risks are proposed as key risks by the RMC, based on inputs from regions, function heads and business leaders. The risk factors set out below reflect the key risks identified. Each of the key risks is assigned to the Chairman of the RMC at the operating subsidiaries who proposes a level of risk the Group is willing to take and develops appropriate action plans to mitigate the risks. All risk mitigation plans are reviewed and agreed by the Board.

Once risk mitigation plans are agreed, each operating subsidiary is asked to carry out a self-assessment exercise which requires all operating units to confirm compliance with the Group’s policies and also to confirm that key operational controls are in place and working effectively. The results of this exercise, together with a review of specific plans for strategic risks, enable the Board to confirm that the business has a sound risk-based framework of internal controls.

The Group Auditors, internal and external, provide independent reassurance that the standard of risk management, compliance and control meet the needs of the business. Group Audit status reports are discussed with ERMC, Audit Committee and Board on a regular basis. The Board also recognises that the risks facing the business may sometimes change over short time periods. Every quarter, each operating subsidiary provides an update on new and emerging risks and reports to update the Group’s risks are provided to the ERMC, Audit Committee and the Board.

The Board concurred with the opinions of its sub-committees, i.e. Audit Committee and ERMC, of the adequacy of the internal controls system (of which risk management is one of its crucial segments) to addressing its financial, operational, compliance and information technology risks in meeting the current scope of the Group’s business operations.

It is not possible and practical to identify and anticipate every risk that may impact the Group. While the Group’s risk management process attempts to identify and manage (where possible) the key risks it faces, no such process can totally eliminate risks or guarantee that every risk is identified, or, that it is possible, economically viable, or prudent to manage such risks.

Consequently, there can never be an absolute assurance against the Group failing to achieve its objectives or a material loss arising. Some material risks may not be known, others, even though currently deemed as immaterial, could become material and new risks may also emerge.

The Board affirms its overall responsibility on risk management and to review the adequacy and integrity of the control system on an annual basis.



1. EXTERNAL RISKS

The Group is subject to a number of external risks. The Group defines external risks as those that stem from factors which are mainly outside of its control. These risks will often arise from the nature of the Group and the industry in which it operates.

GLOBAL ECONOMIC DOWNTURN AND UNCERTAINTIES

The global capital and credit markets have been experiencing periods of volatility and disruption. The global economic uncertainties, concerns over recession, inflation or deflation, energy costs, geopolitical issues, commodity prices and the availability and cost of credit, have contributed to unprecedented levels of market volatility and diminished expectations for the global economy and the capital and consumer markets. These factors, combined with others, precipitated a severe global economic uncertainty.

The Group is susceptible to the cyclical world-wide demand and pricing in its industries, which are highly dependent upon global economic condition.

LEGAL, REGULATORY, POLITICAL AND SOCIETAL RISKS

The Group is at risk from significant and rapid change in the legal systems, regulatory controls, custom and practices in the regions in which it operates.

Political uncertainties, regime change and change in society, including increased scrutiny of the Group, its businesses or its industry, for example by governmental and non-governmental organisations or the media may result in, or increase the rate of, material legal and regulatory change, and changes to custom and practices. These affect a wide range of areas and are expected to have material and adverse impacts on the performance and financial condition of the Group if they are not pre-empted appropriately.

FLUCTUATIONS IN THE BALTIC DRY INDEX (“BDI”)

The BDI is a benchmark of the dry bulk shipping industry and is an indication of the price of moving major raw materials by sea. It is generally recognised as an economic indicator of the movement and volume of global trade.

An increase in the BDI is generally considered to indicate an increase in demand for dry bulk shipping, whereas a decrease in the BDI is generally considered to indicate a decrease in demand for dry bulk shipping, and the capital expenditure of dry bulk shipping companies are usually driven mainly by the BDI outlook.

The dry bulk shipping index has recovered from historical lows but remained at a relatively low level. The fluctuations in the BDI result in an uncertain outlook for the dry bulk shipping industry, which typically has an impact on vessel owners’ willingness to place new orders for bulk carrier vessels, which in turn affects demand for the Group’s services and products.

RISK MANAGEMENT



2. INTERNAL RISKS

Internal risks are those arising from factors primarily within the Group’s control, including from the Group structure and processes.

INFORMATION TECHNOLOGYINFRASTRUCTURE

The Group depends on accurate, timely information and numerical data from key software application to aid day-to-day business and decision making. Any disruption caused by failings in these systems, of underlying equipment or of communication networks could delay or otherwise impact the Group’s day- to-day business and decision making and have materially adverse effects on the Group’s performance.

EMPLOYEES

The Group depends on the continued contributions of its executive officers and employees, both individually and as a group. While the Group reviews its people policies on a regular basis and invests significant resources in training and development and recognising individuals with high potential, there can be no guarantee that it will be able to attract, develop and retain these individuals at an appropriate cost and ensure that the capabilities of the Group’s employees meet its business needs. Any failure to do so may affect the Group’s performance.

The ability to recruit, develop and retain appropriate skills for the Group is made difficult by competition for skilled labor. The failure to retain skilled employees or to recruit new staff may lead to increased costs, interruptions to existing operations and delays in existing and new projects.

A number of strategies are implemented to mitigate this risk including attention to an appropriate suite of reward and benefit structures and ongoing refinement of the Group as an attractive employee proposition.

3. FINANCIAL RISKS

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

Risk management is carried out under policies approved by the Board of Directors. The Board approves guidelines for overall risk management, as well as policies covering these specific areas.

MANAGING CURRENCY FLUCTUATION

The main financial risks facing the Group are fluctuations in foreign currency, interest rate risk, availability of financing to meet the Group’s needs and default by counterparties and customers. Any of these financial risks may materially and adversely impact the Group’s business, financial condition, results of operation and prospects.

The Group has established a management system to address financial risks. Fluctuations in currency exchange rates are closely monitored. The Group at its discretion may employ simple forward hedging on a systematic approach to meet its financial obligations and both foreign and local currencies needs.

The Group does not engage in speculative foreign investments. Strict compliance controls are in place to ensure that procedures are adhered to and management decisions are not made unilaterally.

RISK MANAGEMENT



The Group also engaged the guidance of the holding Company in managing its foreign exchange risk exposure. The holding Company has an experienced Treasury operations team responsible for managing the funding requirements and liquidity risks.

A detailed disclosure of the Group’s financial risks can be found on pages 150 to 159 in the Notes to the Financial Statements.

DISPOSAL OF SHIPYARD BUSINESS AND ACQUISIITON OF LOGISTICS BUSINESS

The Company disposed its (a) 51% equity interest in COSCO Shipyard Group Co., Ltd.; (b) 50% equity interest in COSCO (Nantong) Shipyard Co., Ltd.; and (c) 39.1% equity interest in COSCO (Dalian) Shipyard Co., Ltd. in FY 2017.

As announced, the Group had also completed the acquisition of 40% stake in PT. Ocean Global Shipping and 100% stake in Cogent Holdings Limited and it is now providing integrated logistic service.

With the completion of the disposal of shipyard business in FY 2017 and acquisition of logistic service in 2018, the risk factors of the Group had changed significantly. The Group will perform risk profiling in the newly acquired business and to implement risk mitigation plans accordingly.

RISK MANAGEMENT



SUSTAINABILITY REPORT

CONTENTS

58

59

63

65

68

69

70

71

Board Statement

Our Sustainability Framework and Reporting

60 Sustainability Governance Structure

60 Stakeholder Engagement at COSCO

62 Materiality Assessment

About COSCO

64 Business Segmentation

COSCO’s Core Business Values

65 Sustainability Across Our Key Business Functions

67 Accolades & Memberships

67 Key Sustainability Related Impacts, Risks, and Opportunities

Environment – Nurturing Our Environment

Social – Community and Employee Engagement

Governance – Progress with Purpose

GRI Standards Content Index

Sustainability Report

BOARD STATEMENT

The COSCO SHIPPING International (Singapore) Co., Ltd. (“COSCO”) Board of Directors has assigned responsibility for overseeing the Company’s sustainability initiatives to the Sustainability Team. The Board has always been committed to sustainability and fully supports the adoption of the new SGX sustainability reporting guidelines. As a listed Company, COSCO is committed to the Code of Corporate Governance of Singapore. The Code provides the framework for controls, checks and accountabilities and requires the Board of Directors to consider sustainability issues in its business decisions.

COSCO’s Board of Directors is collectively responsible for the long-term success of the Company. The Board considers sustainability issues as part of its strategy formulation. It has determined COSCO’s material Environmental, Social and Governance (ESG) factors, and exercises oversight in the management and monitoring of its material ESG factors. The 2017 Sustainability Report is our first sustainability report and reflects the Company’s performance on sustainability.

BOARD STATEMENT



This section of the annual report presents the annual sustainability performance of COSCO for the period 1 January 2017 to 31 December 2017. The information in this section (“Sustainability Report”) is organised and presented in accordance with the GRI Standards: Core option published in 2016, established by the Global Reporting Initiative (GRI).

We build upon our sustainability theme “Reshaping Our Future” for our 2017 annual report. This is on account of our performance being a clear demonstration of balanced approach to the three pillars of sustainable development. This section primarily focuses on sustainability aspects pertaining to maritime engineering, dry bulk shipping and property management business of COSCO’s Singapore operations. Information presented in the section has been sourced directly from our operations. We are in the process of setting up sustainability targets and will be reporting on the same in subsequent years. Below is a reflection of our internal sustainability related goals.

OUR SUSTAINABILITY FRAMEWORK AND REPORTING

The GRI Standards Content Index at the end of this section confirms that all disclosures required as per ‘in-accordance core’ criteria of the GRI Standards, are accurately included in this Sustainability Report, as required by disclosures GRI 102-54 and 102-55. For any further query or suggestion related to COSCO’s sustainability initiatives, please reach out to us at [email protected].

ENVIRONMENTAL GOALS

Reduction of energy consumption

Improve on waste management techniques

SOCIAL GOALS

Increase operations with local community and conduct impact

assessment

Increase programs for upgrading employee

skills

GOVERNANCE (ECONOMIC) GOALS

Increase focus on innovative business

practices

Enhance shareholder value



Sustainability Governance Structure

Our key business departments and functions will continue to help us strive for excellence in sustainability and enable COSCO to consider Environmental, Social and Governance (ESG) issues in key decisions making and strategy formulation.


Board of Directors

Business Operations

Marine Engineering

HumanResources

Finance

Audit & Supervisory

Property Management

InvestorRelations

Strategic Development

General Affairs

Sustainability Team

Senior Management

Stakeholder Engagement at COSCO

At COSCO, we understand that the stakeholders are people or entities that are directly or indirectly influenced by our business operations and outcomes, or that can significantly influence our businesses. Feedback from our key stakeholders form a crucial part of our strategic and business planning, and is viewed as a valuable insight for the Company to continuously improve its sustainability performance. Through internal discussion and review, key stakeholder groups are identified across the entire value chain. Engagements with key stakeholder groups are planned annually.




We are committed to expand our engagement methods and use the subsequent output in our future disclosures. COSCO’s management is very much determined to continuously improve upon sustainability performance by engaging with key stakeholder groups.

EMPLOYEES

Monthly management meetings are held to discuss day to day operation issues.

Lunch with Senior Management are organised to orientate employees and familiarise them with the Company’s

management team.

Newsletters are circulated on daily basis to keep employees abreast of COSCO’s news.

Regular training sessions and transitional assistance programs are conducted.

INDUSTRY & GOVERNMENT

We work with various industry associations and with government on areas related to

our key business activities.

Classification associations: DNV Norway, NK Japan, CCS China

Industry associations: Protection & Indemnity

(P&I) (Steamship P&I Club)

Government: Port Authority of Singapore (PSA), Maritime Port Authority (MPA)

CUSTOMER

Customer related surveys and engagement activities are conducted to

collect feedback.

LOCAL COMMUNITIES / NGOs

Regular dialogues are held with our endorsed charity organisations which

shape our community outreach initiatives.

SUPPLIERS & CONTRACTORS

Safety briefings are conducted regularly for staff and contractors working on site.

SHAREHOLDERS & INVESTORS

Shareholders are kept abreast of the Company’s key developments through press releases and Annual Reports.

Annual General Meetings and investor meetings are conducted to engage our shareholders and investors in two-way

communications.

Figure 1 Stakeholder Engagement Mechanisms at COSCO



Materiality Assessment

Materiality assessment is a critical input into our corporate sustainability strategy because it ensures we provide our stakeholders with the sustainability information most relevant to them and to our business. To determine this, we conducted a formal materiality assessment in 2017. The assessment process included interviews with internal stakeholders such as employees and management and internal workshops, to identify the most important Environmental, Social and Governance (ESG) issues.

The Sustainability Team aims to conduct annual assessment of Company’s Material Topics as well as monitor the performance of these topics as part of COSCO’s upcoming sustainability strategy. COSCO adopts a four-step process to define the material aspects in our operations:

• Sustainability Teamshortlists sustainability issues from issues universe

• Material issues are grouped under the shortlisted GRI Material Topics

• The list of ranked Material Topics is circulated to Senior Management for feedback

• The Sustainability Team re-examines the Material Topics in relation to the feedback obtained to prepare for reporting

• Sustainability Team shortlists sustainability topics from the list of Materieal Topics defined under the GRI Standards

• Through discussion and analysis, the topics are ranked in relation to the significance of their economic, environmental, social and governance impact


IDENTIFICATION PRIORITISATION VALIDATION REVIEW

Following are COSCO’s material issues:

In the future, COSCO aims to illustrate degree of importance of material issues to internal and external stakeholders, by mapping the same on a materiality matrix.

ENVIRONMENTAL

Energy Management

Effluents & Waste

SOCIAL

Community Engagement

Training & Education

Employment

GOVERNANCE

Economic Performance



ABOUTCOSCO

In 2017, COSCO offered capabilities in ship repair, ship building and offshore marine engineering through the Group’s six major shipyards strategically located along China’s coastline.

Structural Changes during 2017

In 2017, COSCO took significant steps towards transforming the Company, laying the foundation for a smooth transition of operations to logistics business.

Divesting COSCO Shipyard Group

In 2017, COSCO sold its stake in COSCO Shipyard Group Co., Ltd., COSCO (Nantong) Shipyard Co., Ltd., and COSCO (Dalian) Co., Ltd.

This move has paved the way for COSCO to shift its operational focus to the logistics business in Singapore, Malaysia and Indonesia.

Acquisition of PT. Ocean Global Shipping, Indonesia

In November 2017, COSCO acquired 40% stake of PT. Ocean Global Shipping, which provides logistics services, container canvassing and management, ship agency and chartering and bunkering.

Cogent Holdings Aquisition

In November 2017, COSCO launched a buyout of Cogent Holdings Limited, a Singapore listed logistics Company that has a large presence in both Singapore and Malaysia.



ABOUTCOSCO

(i) Ship repair and marine engineering

(ii) Dry Bulk Carriers which include global transport of dry bulk cargos, typically grain, iron ore, coal, steel, cement and fertiliser

(iii) Services which include property management

Ship repairing and marine engineering, dry bulk carriers and property management have been our core businesses; however, after the takeover of Cogent Holdings Limited, and aquisition of 40% stake in PT. Ocean Global Shipping, our focus will expand to logistics services. Moving forward in 2018, COSCO will focus majorly on logistics services which include land transportation, warehousing, container depot, automotive logistics and project cargo. We will ensure that our customers receive the best integrated solutions in the market. Our expertise from the shipping industry and high customer after care support means that we can customise, localise or globalise our offerings to suit our customers’ needs regardless of the industry they are in.

About Cogent Holdings Limited

Cogent offers a wide range of comprehensive logistics services; from transportation management services, container depot management services, automotive logistics management services, to warehousing and property management services. Being one of the leading logistics service providers in Singapore and a well-trusted business partner in the transport and logistics industry, it has one of Singapore’s largest one-stop integrated logistics hub which consolidates all their services under one roof, enabling seamless synergy of operations leading to higher productivity, improved workplace safety and greater savings for customers.

Business Segmentation

The business at COSCO is segmented into three segments,



COSCO’S CORE BUSINESS VALUES

On 1st March 2016, the parent Company started the programme to consolidate its container shipping operation which was guided by the principle of “Four Ones” (One Team, One Culture, One Goal and One Dream). Following the concept of Four Ones, COSCO strives to be an outstanding enterprise that is larger, more globalised, competitive and valuable, as well as a better practitioner of national initiatives, a better service provider for its customers, a better partner for its suppliers and a better career development platform for its employees.

Risk Management

Risk management and internal controls has been the main focus of the Enterprise Risk Management Committee to raise the standards of corporate governance. At COSCO, the Board of Directors believes that good corporate governance is an effectual balance of promoting the long-term success of the Company and providing accountability and controls systems which are symmetric with risks involved. It is essential to facilitate effective, entrepreneurial and prudent management.

Human Resource

At COSCO, our employees are our most valuable assets; they form the pillars of strengths that support the Company’s operation. We recognise their expertise and contributions in gearing the Company beyond its existing capacity. As such, we value our people and strive to provide a conducive working environment that emphasises the enrichment and empowerment of every individual, in order to achieve organisational growth. Through well-structured programmes encompassing recruitment, training, incentives and benefits; employees are given ample opportunities to expand their competencies and optimise work operations of the Company.

Being in the maritime industry, COSCO requires a highly-skilled talent pool to lead and execute complex and specialised job scopes. Outstanding top graduates from renowned universities are recruited through a strict selection process, and are required to complete the management trainee programmes prior to their induction into the management team. In the course of their work, COSCO continues to monitor and support their progress in achieving both personal and organisational goals. As we work towards upgrading the skillsets of our staff, regular and relevant training courses are specially curated and catered to the different levels of employees with varied job scopes ranging from management to operations.

OUR CORE VALUES

Sustainability Across Our Key Business Functions

As an organisation that is committed to sustained growth and value creation, we adopt responsible practices across our business functions. These are encapsulated in the various policies which govern our business practices, safety and health of our staff and stewardship of the environment.

ONE TEAMONE

CULTURE

ONE DREAMONE GOAL




Technical staff are also required to undergo annual assessment conducted in simulated environments to ensure that they remain equipped and competent in meeting the necessary standards and safety measures at the worksite.

The Company recognises the importance of staff recognition and empowerment in its pursuit for sustainable organisational growth. Besides maintaining fair management through open communication channels, we encourage employees to attend management courses and partake in the decision-making process. We also seek to entrust them with greater shared responsibilities. These approaches complement well with our performance and achievement appraisal system that aligns employee’s work goals with personal career development and competitive remuneration.

Apart from tangible rewards, COSCO also gives attention to employees’ overall well-being. Seminars relating to wellness are periodically conducted to help raise health awareness among staff, and improve their mental well-being at work.

Workplace Safety

Rooted in COSCO’s ethos that respect every individual’s right to a safe working environment, health and safety of our employees have always been of the utmost importance. COSCO enforces strict adherence to the Company’s Safety Guidelines that are underpinned by training plans and matrixes such as Behaviour-based Safety (BBS) and Job Safety Analysis (JSA). In safeguarding the safety of all our employees, we have also worked through various programmes to inculcate an acute sense of safety consciousness that stems from the individuals. These programmes are constantly revised to meet current and future needs of the Company.

With the aim to enhance employees’ proficiency levels in shipyard operations and to reinforce existing precautionary safety measures in their respective fields, COSCO organises regular safety training courses and engages qualified instructors from established training centres to deliver in-depth safety studies and analysis. Without exception, all new hires are required to complete mandatory training courses and pass relevant examinations prior to commencing their duties.

COSCO adopts industry’s best practices and complies with international safety standards. Likewise, our robust safety management system is established in accordance with the requirement of the OHSAS 1800 occupational health and safety management system standards.

The “Annual Safety Month” was launch across COSCO shipyards in China to promote safety culture on the ground and keep employees abreast of safety developments. Besides safety campaigns help during the Annual Safety Month, safety education and training are carried out year-round to ensure that proficiency level across the various units are consistent and up to date. Regular on-site inspections at the respective shipyards are performed to ensure the strict adherence to safety precautions across the production line.




Key Sustainability Related Impacts, Risks, and Opportunities

Operating from multiple locations exposes the Company to risks related to laws and regulations of governments and regulatory bodies in different countries. COSCO recognises the importance of establishing resilient relationships with business partners and local authorities to keep abreast of prevailing changes in statutory and regulatory requirements in the countries we operate. Moreover, COSCO’s operating environment is developed and managed based on locally and internationally recognised standards in quality management and practices. We believe, our Company is perfectly positioned to deliver business efficiently.

Singapore has built up a strong reputation as a logistics hub and is a regional springboard connecting the Asian markets to the rest of the world. Given the challenging market conditions in the marine industry, COSCO has divested its investments in the shipyard business into the growing logistics service businesses. We believe that the new businesses can leverage on our existing logistics knowledge and global presence to cross sell our services and develop new businesses and revenue streams in the future.

CERTIFIED MEMBER OF THE SINGAPORE MARITIME OFFICERS UNION

Corporate Social Responsibility

In line with the Company’s firm commitment to social responsibility, COSCO has always sought to play a significant and meaningful role in its contribution towards the community and the environment. Industry best practices are applied across the organisation, and employees of various levels have been well supported in their Corporate Social Responsibility initiatives. We believe that all of these efforts have contributed to maintaining the reciprocal relationship between the Company and the community.

In supporting the Chinese art and cultural development in Singapore, COSCO has been a steadfast patron of the Singapore Chinese Orchestra in fulfilling its social and artistic mission. We believe these initiatives have made a difference and affirmed COSCO’s stand in supporting worthy charity and causes. Moving forward, COSCO will continue its efforts to engage in social and environmental causes.

Accolades & Memberships



NURTURING OUR ENVIRONMENT

ENVIRONMENT

COSCO would like to reaffirm its commitment to environmental sustainability through energy conservation and resource optimisation efforts. We aim to reduce our energy consumption usage through various means of energy reducing methods. We strive to educate our employees on the various method that can be adopted in order to reduce energy consumption.

ENERGY AND FUEL MANAGEMENT

(a) Reduction of energy consumption

We aim to reflect on our current environment related policies, practices and initiatives to minimise the environmental impacts of energy consumption and maximise operational efficiencies.

COSCO aims to reduce its energy consumption in office by adopting innovative practices and promoting environment friendly behaviour amongst employees. We encourage all employees to turn off all their computers and laptops after office hours. We also aim to reduce our energy consumption by switching all our equipment to energy efficient equipment where applicable. We will strengthen data collection process with respect to energy and fuel management and will be reporting in the subsequent years.

At COSCO, we aim to ensure compliance to environmental norms and regulations.

We work with many governmental and nongovernmental organisations, to develop and integrate sustainability best practices in our daily operations. COSCO operations include use of high energy consumption equipment. To operate these equipment, large amounts of energy is sourced from non-renewable sources. In future, we aim to further survey the market and analyse the habits that we can adopt to identify various measures for reducing energy consumption.

Our decision to change our business operations has been done with careful considerations and planning. But we are excited about the future at COSCO, and our new venture in logistics services. We will continue to use innovative technology in delivering sustainable logistics solutions. Resource optimisation and better route planning to reduce redundancies in distribution are examples of how we can minimise negative environmental impact while reducing costs.

EFFLUENTS AND WASTE

(b) Waste by type & disposal method

The key types of waste generated in our operations in 2017 were paper, waste oil, waste water and general waste. Going forward we intend to measure the waste generated through our operations and report quantity of waste by different disposal methods. We will strengthen data collection process with respect to waste and effluents and will be reporting in the subsequent years. At COSCO, we are also exploring new recycling initiatives.



COMMUNITY ANDEMPLOYEE ENGAGEMENT

TRAINING AND EDUCATION

(b) Programs for upgrading employeeskills and transition assistanceprograms

Upgrading our employees’ skills and providing them with proper training are important aspects to the management at COSCO. COSCO is committed to provide its employees with training programs that are designed for specific skills development.

At COSCO, transition assistance programs are provided to support employees who are retiring or who have been terminated. These programmes include:

• Pre-retirement planning for intended retirees• Retraining for those intending to continue

working• Severance pay, which can take into account

employee age and years of service• Job placement services• Assistance (such as training, counselling)

on transitioning to a non-working life

At COSCO, our aim is to continuously provide our employees with trainings that not only enhance their skills but also adds to their personality development. Our employee training programs that aim to upgrade skills include:

• Internal training courses

• Funding support for external training or education

• The provision of sabbatical periods with guaranteed

Our employee’s health and wellness are important to us. We provide annual health screening for all full time employees. We distribute fruits and cakes to all employees on special occasions.

SOCIAL

At COSCO, we value the importance of being a responsible corporate citizen and believe in contributing to the society. We will continue to improve employee engagement through regular training sessions and transitional assistance programs to ensure that all our employees are well integrated into the Company.

COMMUNITY ENGAGEMENT

(a) Operations with local communityengagements, impact assessments, and development programs

COSCO has always been keen to play a significant role in contribution towards the community at large. In Singapore, COSCO has been a steadfast patron of the Chinese art and cultural development. COSCO has been one of the Singapore Chinese Orchestra’s patrons for the past five years. Our donation aides the Singapore Chinese Orchestra in its social and artistic missions.

We believe these initiative have made a difference and affirmed COSCO’s stand in supporting worthy charity and causes. Moving forward COSCO will continue its efforts to engage in social and environmental causes and aims to report on the impact created in the society.



EMPLOYMENT

(c) Benefits provided to full-time employees that are not provided to temporary or part-timeemployees

At COSCO, we value our employees as they are the pillars that support the Company in every aspect of our operations. We currently provide our employees with benefits such as insurance, meals and transport reimbursement, parental leave, childcare leave, retirement benefits, as well as a special gift for all our staff on their birthday month.

Since 2017, COSCO has increased the benefits of all its full-time employees by providing them with a wider insurance coverage. Full-time staff insurance coverage now includes Inpatient (Hospital & Surgical) and Outpatient care, Travel and Personal Accidents as well as Dental coverage.

One of COSCO’s top priority is to continuously improve their employees’ quality of life. Moving forward, the Management of COSCO aims to increase their employee benefits further by including study leave, educational fund, and increase the recreational activities for all of their employees. The management has proposed for non-Singaporean employees to be entitled to child care leave. Additional childcare leave has also been proposed for all current employees that are entitled to these benefits.

PROGRESSWITH PURPOSE

GOVERNANCE

We work towards empowering our people, strengthening our supply chain, nurturing the environment we operate in and collaborating with business community.

ECONOMIC PERFORMANCE

(a) Direct economic value generated and distributed

At COSCO, we understand business sustainability depends on integration of financial economic performance and non-financial i.e. environmental, social performance. Our corporate culture, value chain and business models are aimed towards creating value for all stakeholders.

Our first Sustainability Report comes at a time of change for us and the industries in which we operate. Amid low economic growth and changes in regulatory pressures, we have responded with a whole new strategy for COSCO’s future businesses. In 2018, COSCO aims to be a leading service provider creating and delivering best-in-class logistics services to companies around the South and Southeast Asia region.

Economic performance is defined as our most material aspect because, like most companies, our economic success ensures our long-term viability and enables the execution of our sustainability strategies. Please refer for details on direct economic value generated and distributed in 2017.



GRI STANDARDS CONTENT INDEX

GRI Content IndexGRI Standard Disclosure Page No. and/or URL

General DisclosuresGRI 102: General Disclosures 2016 Organisational Profile

102-1 Name of the organisation 1102-2 Activities, brands, products, and services 2, 64102-3 Location of headquarters 18, 41, 58102-4 Location of operations 14, 16, 63102-5 Ownership and legal form 58102-6 Markets served 2, 64, 67102-7 Scale of the organisation 4, 14, 17102-8 Information on employees and other

workersTotal employees: 16

Permanent:16; Contract:0Male:11; Female:5

Full-time: 16; Part-time:0102-9 Supply chain 2, 65102-10 Significant changes to the organisation

and its supply chain65

102-11 Precautionary Principle or approach 65,67102-12 External initiatives 61, 67102-13 Membership of associations 61, 67

Strategy102-14 Statement from senior decision-maker 6

Ethics and Integrity 102-16 Values, principles, standards, and norms

of behaviour65

Governance 102-18 Governance structure 18, 42, 60

Stakeholder Engagement102-40 List of stakeholder groups 61102-41 Collective bargaining agreements Not applicable102-42 Identifying and selecting stakeholders 18, 60102-43 Approach to stakeholder engagement 50, 61102-44 Key topics and concerns raised 50, 61

Reporting Practice102-45 Entities included in the consolidated

financial statementsPlease refer Financial

Statements102-46 Defining report content and topic

Boundaries59, 62

102-47 List of material topics 62102-48 Restatements of information Not applicable102-49 Changes in reporting Not applicable102-50 Reporting period 59102-51 Date of most recent report 58102-52 Reporting cycle Annually102-53 Contact point for questions regarding the

report59

102-54 Claims of reporting in accordance with the GRI standards

59

102-55 GRI content index 71-72102-56 External assurance No external assurance



GRI STANDARDS CONTENT INDEX

Material TopicsEnergy and Fuel Management

GRI 103: Management Approach 2016 103-1 Explanation of the material topic and its Boundary

59

103-2 The management approach and its components

68

103-3 Evaluation of the management approach 68GRI 302: Energy 2016 302-4 Reduction of energy consumption 68

Effluents and WasteGRI 103: Management Approach 2016 103-1 Explanation of the material topic and its

Boundary59


68

103-3 Evaluation of the management approach 68GRI 306: Effluents and Waste 2016 306-1 Waste by type and disposal method 68

Economic PerformanceGRI 103: Management Approach 2016 103-1 Explanation of the material topic and its

Boundary59


70

103-3 Evaluation of the management approach 70GRI 201: Economic Performance 2016 201-1 Direct economic value generated and

distributedPlease refer

Financial Statements

EmploymentGRI 103: Management Approach 2016 103-1 Explanation of the material topic and its

Boundary59


70

103-3 Evaluation of the management approach 70GRI 401: Employment 2016 401-2 Benefits provided to full-time employees

that are not provided to temporary or part-time employees

70

Training and EducationGRI 103: Management Approach 2016 103-1 Explanation of the material topic and its

Boundary59

103-2 The management approach and itscomponents

69

103-3 Evaluation of the management approach 69GRI 404: Training and Education 2016 404-2 Programs for upgrading employee skills

and transition assistance programs69

Local CommunitiesGRI 103: Management Approach 2016 103-1 Explanation of the material topic and its

Boundary59


69

103-3 Evaluation of the management approach 69GRI 413: Local Communities 2016 413-1 Operations with local community

engagement, impact assessments, and development programs

69

GRI Content IndexGRI Standard Disclosure Page No. and/or URL



74

79

87

88

89

90

91

93

169

171

172

Directors’ Statement

Independent Auditor’s Report

Consolidated Profi t or Loss

Consolidated Statement of Comprehensive Income

Balance Sheets

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Five-Year Summary

Shareholding Statistics

Notice of Annual General Meeting

Proxy Form for Annual General Meeting

Notes for Proxy Form

DIRECTORS’STATEMENTFor the fi nancial year ended 31 December 2017


| Annual Report 2017 • COSCO SHIPPING International (Singapore) Co., Ltd.74

The directors present their statement to the members together with the audited fi nancial statements of the

Group for the fi nancial year ended 31 December 2017 and the balance sheet of the Company as at 31

December 2017.

In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated fi nancial statements of the Group as set out on

pages 87 to 168 are drawn up so as to give a true and fair view of the fi nancial position of the Company

and of the Group as at 31 December 2017 and the fi nancial performance, changes in equity and cash

fl ows of the Group for the fi nancial year covered by the consolidated fi nancial statements; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to

pay its debts as and when they fall due.

Directors

The directors of the Company in offi ce at the date of this statement are as follows:

Wang Yu Hang

Gu Jing Song

Li Xi Bei

Liang Yan Feng

Tom Yee Lat Shing

Wang Kai Yuen

Er Kwong Wah

Ang Swee Tian

Li Man (alternate director to Wang Yu Hang)

Ouyang Chao Mei (alternate director to Liang Yan Feng)

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement

whose object was to enable the directors of the Company to acquire benefi ts by means of the acquisition of

shares in, or debentures of, the Company or any other body corporate, other than as disclosed under “Share

options” in this statement.

DIRECTORS’STATEMENT

For the fi nancial year ended 31 December 2017


COSCO SHIPPING International (Singapore) Co., Ltd. • Annual Report 2017 | 75

Directors’ interests in shares or debentures

(a) According to the register of directors’ shareholdings, none of the directors holding offi ce at the

end of the fi nancial year had any interest in the shares or debentures of the Company or its related

corporations, except as follows:

Holdings registered in name of director

or nominee

Holdings in which director is deemed to have an interest

At31.12.2017

At

1.1.2017

At31.12.2017

At

1.1.2017

The Company (No. of ordinary shares)

Tom Yee Lat Shing 1,400,000 1,400,000 – –

Wang Kai Yuen 900,000 900,000 100,000 100,000

Er Kwong Wah 650,000 650,000 – –

Ang Swee Tian 130,000 130,000 5,000 5,000

Number of unissued ordinary shares under

optionAt

31.12.2017At

1.1.2017

Related corporationCOSCO SHIPPING Holdings Co., Ltd. - Share Appreciation Rights

Li Man – 200,000

(b) According to the register of directors’ shareholdings, none of the directors holding offi ce at the end

of the fi nancial year had interests in options to subscribe for ordinary shares of the Company granted

pursuant to the COSCO Group Employees’ Share Option Scheme 2002 under “Share options” of this

statement.

(c) The directors’ interests in the ordinary shares and share options of the Company as at 21 January 2018

were the same as those as at 31 December 2017.




Share options

(a) COSCO Group Employees’ Share Option Scheme 2002

The COSCO Group Employees’ Share Option Scheme 2002 (the “Scheme 2002”) was approved by

members of the Company at an Extraordinary General Meeting on 8 May 2002.

Under the Scheme 2002, share options to subscribe for the ordinary shares of the Company are granted

to directors, key management personnel and employees. The exercise price of the granted options is

determined at the average of the closing prices of the Company’s ordinary shares as quoted on the

Singapore Exchange for the fi ve market days immediately preceding the date of the grant. The options

may be exercised in full or in part in respect of 1,000 shares or a multiple thereof, on the payment of

the exercise price. The persons to whom the options have been issued have no right to participate by

virtue of the options in any share issue of any other company. The Group has no legal or constructive

obligation to repurchase or settle the options in cash.

The aggregate number of shares over which options may be granted on any date, when added to the

number of shares issued and issuable in respect of all options granted under the Scheme, shall not

exceed 15% of the issued shares of the Company on the day preceding that date.

Options issued to directors and employees who have been in the service of the Company, subsidiary

or associated company, or the holding corporation for at least one year on or prior to the date of the

grant, may be exercised twelve months after the date of grant but before the end of one hundred and

twenty months. For employees and directors who are in the service of the associated company and

non-executive directors, the options shall expire at the end of sixty months. Options issued at a discount

to market price, may only be exercised two years after the date of the grant.


or associated company, or the holding corporation for at least six months but less than one year on or

prior to the date of grant, may be exercised twenty-four months after the date of the grant but before

the end of one hundred and twenty months. For employees and directors who are in the service of the

associated company and non-executive directors, the options shall expire at the end of sixty months.

Options issued at a discount to market price, may only be exercised three years after the date of the

grant.

Particulars of the options granted pursuant to the Scheme 2002 in 2006, 2007 and 2008 known as

“2006 Options”, “2007 Options” and “2008 Options” respectively were set out in the Directors’

Report for the fi nancial years ended 31 December 2006, 31 December 2007 and 31 December 2008

respectively.

The Remuneration Committee administering the Scheme 2002 comprises the following directors:

Er Kwong Wah (Chairman)

Gu Jing Song

Tom Yee Lat Shing

Wang Kai Yuen

Ang Swee Tian

DIRECTORS’STATEMENT




Share options (continued)

(a) COSCO Group Employees’ Share Option Scheme 2002 (continued)

Details of the options granted to directors of the Company are as follows:

Aggregategranted since

commencementof Scheme

2002 to

Aggregateexercised sincecommencement

of Scheme2002 to

Aggregatelapsed since

commencementof Scheme

2002 to

Aggregateoutstanding

as atName of directors 31.12.2017 31.12.2017 31.12.2017 31.12.2017

Tom Yee Lat Shing 2,200,000 1,900,000 300,000 –

Wang Kai Yuen 2,200,000 1,900,000 300,000 –

Er Kwong Wah 2,200,000 1,600,000 600,000 –

6,600,000 5,400,000 1,200,000 –

No options have been granted during the fi nancial year.

No options have been granted to controlling shareholders of the Company or their associates (as defi ned

in the Listing Manual of Singapore Exchange Securities Trading Limited).

No participant under the Scheme 2002 has received 5% or more of the total number of shares under

option available under the Scheme 2002.

There were no shares of the Company allotted and issued by virtue of the exercise of options to take

up unissued shares of the Company during the fi nancial year. There were no unissued shares of the

subsidiaries under option at the end of the fi nancial year.

(b) Share options outstanding

The number of unissued ordinary shares of the Company under option in relation to the Scheme 2002

outstanding at the end of the fi nancial year was as follows:

Numberof unissued

ordinary shares

at1.1.2017

Numberof unissued

ordinary shareslapsed

during thefi nancial

year

Numberof unissued

ordinary shares

at31.12.2017

Exerciseprice Exercise period

’000 ’000 ’000 $

2007 Options 2,800 (2,800) – 2.48 5.2.2008 – 4.2.2017

2008 Options 6,750 (6,030) 720 2.95 24.3.2009 – 23.3.2018

9,550 (8,830) 720




Audit Committee

The members of the Audit Committee at the end of the fi nancial year were as follows:

Tom Yee Lat Shing (Chairman) Non-Executive Lead Independent

Wang Kai Yuen Non-Executive Independent

Er Kwong Wah Non-Executive Independent

Ang Swee Tian Non-Executive Independent

All members of the Audit Committee were non-executive directors.

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies

Act. In performing those functions, the Committee reviewed:

the scope and the results of internal audit procedures with the internal auditor;

the audit plan of the Company’s independent auditor and any recommendations on internal accounting

controls arising from the statutory audit;

the assistance given by the Company’s management to the independent auditor; and

the balance sheet of the Company and the consolidated fi nancial statements of the Group for the

fi nancial year ended 31 December 2017 before their submission to the Board of Directors.

The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers

LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

Independent auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-

appointment.

On behalf of the directors

GU JING SONGDirector

TOM YEE LAT SHINGDirector

9 March 2018


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF COSCO SHIPPING INTERNATIONAL (SINGAPORE) CO., LTD.

(Formerly known as COSCO Corporation (Singapore) Limited)



Report on the Audit of the Financial Statements

Our Opinion

In our opinion, the accompanying consolidated fi nancial statements of COSCO SHIPPING International

(Singapore) Co., Ltd. (formerly known as COSCO Corporation (Singapore) Limited) (the “Company”) and its

subsidiaries (the “Group”) and the balance sheet of the Company are properly drawn up in accordance with

the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore

(“FRSs”) so as to give a true and fair view of the consolidated fi nancial position of the Group and the fi nancial

position of the Company as at 31 December 2017 and of the consolidated fi nancial performance, consolidated

changes in equity and consolidated cash fl ows of the Group for the fi nancial year ended on that date.

What we have audited

The fi nancial statements of the Company and the Group comprise:

the consolidated profi t or loss of the Group for the year ended 31 December 2017;

the consolidated statement of comprehensive income of the Group for the year then ended;

the balance sheet of the Group as at 31 December 2017;

the balance sheet of the Company as at 31 December 2017;

the consolidated statement of changes in equity of the Group for the year then ended;

the consolidated statement of cash fl ows of the Group for the year then ended; and

the notes to the fi nancial statements, including a summary of signifi cant accounting policies.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial

Statements section of our report.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our

opinion.

Independence

We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code

of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together

with the ethical requirements that are relevant to our audit of the fi nancial statements in Singapore, and we

have fulfi lled our other ethical responsibilities in accordance with these requirements and the ACRA Code.

Our Audit Approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement

in the accompanying fi nancial statements. In particular, we considered where management made subjective

judgments; for example, in respect of signifi cant accounting estimates that involved making assumptions and

considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of

management override of internal controls, including among other matters consideration of whether there was

evidence of bias that represented a risk of material misstatement due to fraud.


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF COSCO SHIPPING INTERNATIONAL (SINGAPORE) CO., LTD.(Formerly known as COSCO Corporation (Singapore) Limited)



Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most signifi cance in our audit

of the fi nancial statements for the fi nancial year ended 31 December 2017. These matters were addressed in

the context of our audit of the fi nancial statements as a whole, and in forming our opinion thereon, and we do

not provide a separate opinion on these matters.

Key Audit Matter How our audit addressed the Key Audit Matter

1) Discontinued operations (Refer to Notes 2.28 and 10 to the fi nancial

statements)

During the year, the Company disposed its entire

equity interest in COSCO Shipyard Group Co.,

Ltd., COSCO (Dalian) Shipyard Co., Ltd., and

COSCO (Nantong) Shipyard Co., Ltd. (collectively

the “Disposal Group”) to COSCO Shipping Heavy

Industry Co., Ltd., a wholly-owned subsidiary

of parent company China COSCO Shipping

Corporation Limited (“China COSCO”), at a sales

consideration (net of tax) of RMB1,413 million

(approximately S$290 million). Accordingly, the

Group has ceased consolidation of the Disposal

Group. The disposal has been accounted as

“Discontinued operations”.

We have considered “Discontinued operations”

as a key audit matter as signifi cant judgement areas

are involved in determining the following:

- Loss after tax from discontinued operations; and

- Carrying amounts of assets and liabilities

disposed of, which consequently determines

the after-tax gain recognized on the disposal of

subsidiaries.

Such signifi cant judgement areas set out below have

been considered by us in forming our opinion on the

Group’s fi nancial statements for the year ended 31

December 2017.

Refer to Note 2.28 – Discontinued operations, for

the accounting policies for discontinued operations

and Note 3 – Critical accounting estimates,

assumptions and judgments, for disclosures relating

to the significant judgements in relation to the

discontinued operations.






Key Audit Matters (continued)


a) Revenue and cost recognition of construction contracts using the percentage-of-completion (“POC”) method

(Refer to Notes 2.7 and 10 to the financial

statements)

The Disposal Group recognised revenue and cost

based on the percentage-of-completion (“POC”)

method amounting to $1,588 million and $1,546

million respectively as disclosed in Note 10 to the

fi nancial statements.

The Disposal Group adopted the POC method

in determining revenue and cost recognition for

its construction contracts. For these contracts,

management estimates the physical proportion

of the contract work completed, which are used

to measure the POC for the Disposal Group’s

recognition of construction revenue and construction

cost. When it is probable that the contract costs

will exceed the total contract revenue, a provision

for foreseeable losses is recognised as expense

immediately.

Signifi cant judgements are used to estimate the

POC and total contract costs. In making these

estimates, management has relied on the expertise

of the Disposal Group’s engineers to determine the

progress of the construction, past experience of

completed projects, and industry practices.

a) Our audit procedures in relation to assessment of POC and total contract costs determined by management include:

- Sighted to certified progress reports from

engineers, performed site visits, and obtained

confi rmations from project owners to assess the

appropriateness of management’s estimates of

the physical proportion of work completed;

- Evaluated the effectiveness of management’s

controls over the estimation of total costs

and assessed the reasonableness of key

inputs in the cost estimation. We tested

the appropriateness of estimated costs by

comparing these against actual costs incurred;

- Reviewed management’s POC estimation

by comparing the actual cost incurred as a

percentage to the total contract costs;

- Recomputed revenue and cost of sales

recognised;

- Recomputed provision for foreseeable losses.

We considered the judgements made by

management in relation to the estimation of POC

and total contract costs to be appropriate based on

the audit procedures we have performed.







b) Impairment of trade and other receivables (Refer to Notes 2.11(e)(i) and 12 to the fi nancial

statements)

At disposal date, the trade and other receivables

balance of the Disposal Group amounted to $3,849

million (Gross amount of $4,259 million, allowance

for impairment of receivables of $410 million).

With the oil and gas industry facing challenges,

some customers had requested for amendments to

contract terms, deferral of delivery dates of vessels

and/or are facing fi nancial diffi culties, impacting the

recoverability of the trade and other receivables of

such construction contracts.

In reviewing trade and other receivables,

management has made signifi cant judgments in:

- Assessing whether the Disposal Group’s

customers will be able to fulfi l their contractual

obligations to take delivery of their orders;

- Assessing whether there is any observable

data indicating that there had been a signifi cant

change in the payment ability of debtors;

- Determining the recoverable amount of trade

and other receivables based on the historical

loss experience for assets with similar credit risk

characteristics; and

- Estimating the recoverable amount of trade and

other receivables based on external valuation

reports.

b) Our audit procedures in relation to impairment of trade and other receivables include:

- Reviewed management’s assessment of the risk

of customers defaulting on the contracts, and

corroborated management’s assessment against

our understanding of the industry and publicly

available announcements and information to

understand the fi nancial position of the major

customers;

- Reviewed payment milestones due from

customers for selected debtors and discussed

with management on their assessment

of whether impairment of trade and other

receivables is required for any overdue

payments;

- Reviewed the methodology adopted by

management in determining the recoverable

amount of trade and other receivables

determined to be impaired; and

- Where external valuers are engaged by

management to estimate the recoverable

amount of trade and other receivables, we have

evaluated the competency, capabilities and

objectivity of management’s external valuers and

assessed the reasonableness of the estimated

recoverable amount by reference to industry

reports.


management in relation to impairment of trade and

other receivables to be appropriate based on the

audit procedures we have performed.








c) Net realisable value (“NRV”) of inventories work-in-progress

(Refer to Notes 2.18 and 12 to the fi nancial

statements)

At disposal date, the Disposal Group held certain

vessels as inventories work-in-progress with carrying

value of $1,009 million (Gross amount of $1,452

million, provision for write-down of inventories WIP

of $443 million).

In estimating the net realisable value (“NRV”) of

these inventories, management has estimated the

selling price of these inventories based on external

valuation reports.

c) Our audit procedures in relation to the NRV of inventories work-in-progress include:

- Reviewed contractual terms to assess if the

Disposal Group has the legal title to these

vessels; and

- Assessed valuation performed by external

valuers engaged by management by evaluating

the competency, capabilities and objectivity of

management’s external valuers and assessing

the reasonableness of the estimated recoverable

amount by reference to industry reports.


management in relation to the estimation of NRV

of inventories work-in-progress to be appropriate

based on the audit procedures we have performed.

d) Recoverability of deferred income tax assets (“DTA”)

(Refer to Notes 2.19 and 12 to the fi nancial

statements)

At disposal date, the Disposal Group’s DTA

amounted to $87 million. The DTA arose from

deductible temporary differences and tax losses of

certain subsidiaries operating in People’s Republic

of China (“PRC”). Under PRC’s tax legislation, such

tax losses can be carried forward for fi ve years,

beginning from the date such tax losses have been

incurred.

The recoverability of DTA is based on the judgement

made by the management on the expected future

taxable profits available which the DTA can be

utilised.

d) Our audit procedures in relation to assessing the recoverability of DTA include:

- Discussed with management the key

assumptions made regarding revenue growth

assumptions and estimated expenses by

comparing them with historical results; and

- Compared the revenue growth assumptions to

independent industry reports;

- Verified the mathematical accuracy of the

calculations in management’s fi ve-year taxable

profi t projection.


management in relation to recoverability of DTA to

be appropriate based on the audit procedures we

have performed.





Other Information

Management is responsible for the other information. The other information comprises the Board of Directors,

Corporate Governance Report, Sustainability Report and Directors’ Statement (but does not include the

fi nancial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s

report, and the other sections of the annual report (“the Other Sections”), which are expected to be made

available to us after that date.

Our opinion on the fi nancial statements does not cover the other information and we do not and will not

express any form of assurance conclusion thereon.

In connection with our audit of the fi nancial statements, our responsibility is to read the other information

identifi ed above and, in doing so, consider whether the other information is materially inconsistent with the

fi nancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this

auditor’s report, we conclude that there is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

When we read the Other Sections, if we conclude that there is a material misstatement therein, we are required

to communicate the matter to those charged with governance and take appropriate actions in accordance with

SSAs.

Responsibilities of Management and Directors for the Financial Statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in

accordance with the provisions of the Act and FRSs, and for devising and maintaining a system of internal

accounting controls suffi cient to provide a reasonable assurance that assets are safeguarded against loss

from unauthorised use or disposition; and transactions are properly authorised and that they are recorded

as necessary to permit the preparation of true and fair fi nancial statements and to maintain accountability of

assets.

In preparing the fi nancial statements, management is responsible for assessing the Group’s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern

basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no

realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s fi nancial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the fi nancial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected

to infl uence the economic decisions of users taken on the basis of these fi nancial statements.






Auditor’s Responsibilities for the Audit of the Financial Statements (continued)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the fi nancial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is suffi cient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast signifi cant doubt on the Group’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to

the related disclosures in the fi nancial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.

However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the fi nancial statements, including the

disclosures, and whether the fi nancial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or

business activities within the Group to express an opinion on the consolidated fi nancial statements.

We are responsible for the direction, supervision and performance of the group audit. We remain solely

responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit

and signifi cant audit fi ndings, including any signifi cant defi ciencies in internal control that we identify during our

audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most signifi cance

in the audit of the fi nancial statements of the current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the

matter or when, in extremely rare circumstances, we determine that a matter should not be communicated

in our report because the adverse consequences of doing so would reasonably be expected to outweigh the

public interest benefi ts of such communication.





Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those

subsidiary corporations incorporated in Singapore of which we are the auditors have been properly kept in

accordance with the provisions of the Act.

The engagement partner on the audit resulting in this independent auditor’s report is Tham Tuck Seng.

PricewaterhouseCoopers LLP

Public Accountants and Chartered Accountants

Singapore, 9 March 2018


CONSOLIDATEDPROFIT OR LOSS



The accompanying notes form an integral part of these fi nancial statements.

Note 2017 2016

$’000 $’000

(restated)


Sales 4 37,186 40,505

Cost of sales 5 (25,630) (46,509)

Gross profi t/(loss) 11,556 (6,004)

Other income 7 2,092 2,160

Other gains and losses 8 (24,326) (2,803)

Expenses

- Distribution 5 (222) (497)

- Administrative 5 (15,749) (18,327)

Loss before income tax (26,649) (25,471)

Income tax expense 9(a) (406) (522)

Loss from continuing operations (27,055) (25,993)

Discontinued operationsProfi t/(loss) from discontinued operations 10 166,875 (950,091)

Total profi t/(loss) 139,820 (976,084)

Profi t/(loss) attributable to:Equity holders of the Company 263,876 (466,499)

Non-controlling interests (124,056) (509,585)

139,820 (976,084)

Profi t/(loss) attributable to equity holders of the Company relates to:Loss from continuing operations (27,248) (26,128)

Profi t/(loss) from discontinued operations 291,124 (440,371)

263,876 (466,499)

Earnings per share for profi t/(loss) from continuing and discontinued operations attributable to equity holders of the Company (expressed in cents per share)

Basic earnings per shareFrom continuing operations 11(a) (1.22) (1.16)

From discontinued operations 11(a) 13.00 (19.67)

Diluted earnings per shareFrom continuing operations 11(b) (1.22) (1.16)

From discontinued operations 11(b) 13.00 (19.67)


CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOMEFor the fi nancial year ended 31 December 2017



Note 2017 2016

$’000 $’000

Total profi t/(loss) 139,820 (976,084)

Other comprehensive income/(loss):

Items that may be reclassifi ed subsequently to profi t or loss:

Available-for-sale fi nancial assets

- Fair value gain/(loss) 31(b)(iv) 46 (57)

- Reclassifi cation on the disposal of subsidiaries 31(b)(iv) (232) –

Currency translation differences arising from consolidation

- Losses 31(b)(iii) (2,327) (40,446)

- Reclassifi cation on the disposal of subsidiaries 31(b)(iii) (79,799) –

Other comprehensive loss, net of tax (82,312) (40,503)

Total comprehensive income/(loss) 57,508 (1,016,587)

Total comprehensive income/(loss) attributable to:Equity holders of the Company 179,141 (486,125)

Non-controlling interests (121,633) (530,462)

57,508 (1,016,587)


BALANCESHEETS

As at 31 December 2017



The Group The CompanyNote 2017

$’0002016

$’000

2017$’000

2016

$’000

ASSETSCurrent assetsCash and cash equivalents 12 58,504 1,520,375 35,995 29,868

Restricted cash 12 140,660 – 140,660 –

Trade and other receivables 13 308,844 4,531,947 301,086 57,866

Inventories 14 199 835,582 – –

Construction contract work-in-progress 15 – 72,408 – –

Income tax receivables – 1,933 – –

Other current assets 16 592 11,891 465 100

508,799 6,974,136 478,206 87,834

Non-current assetsTrade and other receivables 17 – 102,556 – –

Available-for-sale fi nancial assets 18 – 4,599 – –

Club memberships 19 147 280 34 48

Investments in associated companies 20 – 4,185 – –

Investments in subsidiaries 21 – – 126,639 372,778

Investment properties 22 13,786 14,675 – –

Property, plant and equipment 23 40,638 2,527,363 182 393

Intangible assets 24 – 9,536 – –

Deferred expenditure 25 766 2,799 – –

Deferred income tax assets 29 – 140,598 – –

55,337 2,806,591 126,855 373,219

Total assets 564,136 9,780,727 605,061 461,053

LIABILITIESCurrent liabilitiesTrade and other payables 26 46,770 2,095,706 89,125 17,585

Current income tax liabilities 612 9,877 19 2,174

Borrowings 27 – 4,297,091 – –

Provisions 28 – 38,949 – –

47,382 6,441,623 89,144 19,759

Non-current liabilitiesBorrowings 27 – 3,018,327 – –

Deferred income tax liabilities 29 132 263 – –

132 3,018,590 – –

Total liabilities 47,514 9,460,213 89,144 19,759

NET ASSETS 516,622 320,514 515,917 441,294

EQUITYCapital and reserves attributable to equity holders of the CompanyShare capital 30 270,608 270,608 270,608 270,608

Statutory and other reserves 31 (18,958) 311,859 45,105 45,105

Retained earnings/(accumulated loss) 263,551 (246,407) 200,204 125,581

515,201 336,060 515,917 441,294

Non-controlling interests 1,421 (15,546) – –

Total equity 516,622 320,514 515,917 441,294


CONSOLIDATED STATEMENT OFCHANGES IN EQUITYFor the fi nancial year ended 31 December 2017



Attributable to equity holders of the Company

Note

Sharecapital

Statutoryand otherreserves

(Accumulated loss)/

retainedearnings Total

Non-controllinginterests

Totalequity

$’000 $’000 $’000 $’000 $’000 $’000

2017Beginning of fi nancial year 270,608 311,859 (246,407) 336,060 (15,546) 320,514Total comprehensive (loss)/income

for the year – (84,735) 263,876 179,141 (121,633) 57,508

Disposal of subsidiaries – (246,215) 246,215 – 138,700 138,700

Dividend declared by a subsidiary

to non-controlling interests of

a subsidiary – – – – (100) (100)

Transfer from retained earnings to

statutory reserves 31(b)(ii) – 133 (133) – – –

End of fi nancial year 270,608 (18,958) 263,551 515,201 1,421 516,622

2016Beginning of fi nancial year 270,608 328,838 222,586 822,032 517,951 1,339,983Total comprehensive loss for

the year – (19,626) (466,499) (486,125) (530,462) (1,016,587)

Dividend declared by subsidiaries

to non-controlling interests of

subsidiaries – – – – (1,494) (1,494)

Transfer from retained earnings to

statutory reserves 31(b)(ii) – 2,494 (2,494) – – –

Changes in ownership interests

in subsidiaries - acquisition of

additional interests in subsidiaries 31(b)(v) – 153 – 153 (1,541) (1,388)

End of fi nancial year 270,608 311,859 (246,407) 336,060 (15,546) 320,514


CONSOLIDATED STATEMENT OFCASH FLOWS




Note 2017$’000

2016

$’000

Cash fl ows from operating activitiesTotal profi t/(loss) 139,820 (976,084)

Adjustments for:

- Amortisation of deferred expenditure 78 87

- Depreciation of investment properties and property,

plant and equipment 120,338 143,594

- Dividend income (30) (729)

- Income tax expense 63,356 98,319

- Interest expense 189,621 224,784

- Interest income (22,629) (27,888)

- Allowance for expected losses recognised on construction

contracts 190,054 73,449

- Write-down of inventories 46,198 283,379

- Loss on disposal of transferable club memberships 42 33

- Allowance for impairment of property, plant and equipment – 11,013

- Net (reversal)/allowance for impairment of trade and other

receivables (93,536) 180,282

- Loss on disposal of property, plant and equipment 22,589 2,089

- Share of loss of associated companies 284 250

- Write-off of property, plant and equipment 2,790 360

- Pre-tax gain recognised on the disposal of subsidiaries (384,364) –

- Exchange differences (267,796) 238,741

6,815 251,679

Changes in working capital:

- Inventories and construction contract work-in-progress (109,051) 70,804

- Trade and other receivables 468,067 (343,158)

- Trade and other payables (92,537) (401,343)

- Other current assets 1,160 3,646

- Provisions 77,091 (17,551)

Cash provided by/(used in) operations 351,545 (435,923)

Income tax paid (9,660) (2,513)

Net cash provided by/(used in) operating activities 341,885 (438,436)

Cash fl ows from investing activitiesAdditions to property, plant and equipment (9,231) (26,070)

Disposal of transferable club memberships 84 1

Disposal of property, plant and equipment 21,608 3,040

Disposal of subsidiaries, net cash outfl ow 12 (1,143,995) –

Additions to investment properties (148) –

Increase in restricted cash (140,660) –

Interest received 18,920 21,733

Dividends received 30 776

Net cash used in investing activities (1,253,392) (520)


CONSOLIDATED STATEMENT OFCASH FLOWSFor the fi nancial year ended 31 December 2017



Note 2017$’000

2016

$’000

Cash fl ows from fi nancing activitiesProceeds from borrowings 2,249,394 5,352,000

Repayments of borrowings (2,577,630) (4,709,631)

Cash outfl ow to non-controlling interests on acquisition of additional

interests in subsidiaries – (1,388)

Decrease/(increase) in bank deposits pledged 848 (129)

Interest paid (181,011) (216,730)

Dividends paid to non-controlling interests of subsidiaries (1,005) (2,603)

Net cash (used in)/provided by fi nancing activities (509,404) 421,519

Net decrease in cash and cash equivalents (1,420,911) (17,437)

Cash and cash equivalents at beginning of fi nancial year 1,518,398 1,569,004

Effects of currency translation on cash and cash equivalents (38,983) (33,169)

Cash and cash equivalents at end of fi nancial year 12 58,504 1,518,398

Reconciliation of liabilities arising from fi nancing activities

1 January2017$’000

Principal and interest payments

$’000

Non-cash changes

31 December 2017$’000

Interest expense

$’000

Disposal of

subsidiaries$’000

Foreign exchange movement

$’000

Bank borrowings 7,315,418 (328,236) – (6,621,733) (365,449) –

Interest payable 20,014 (181,011) 189,621 (28,426) (198) –


NOTES TO THEFINANCIAL STATEMENTS



These notes form an integral part of and should be read in conjunction with the accompanying fi nancial

statements.

1. General information

With effect from 20 April 2017, the name of the Company has been changed from COSCO Corporation

(Singapore) Limited to COSCO SHIPPING International (Singapore) Co., Ltd..

COSCO SHIPPING International (Singapore) Co., Ltd. (the “Company”) is listed on the Singapore

Exchange and incorporated and domiciled in Singapore. The address of its registered offi ce is 30 Cecil

Street, Prudential Tower, #26-01, Singapore 049712.

The principal activities of the Company are those of investment holding. The principal activities of its

subsidiaries are set out in Note 21 to the fi nancial statements.

The ship repair, ship building and marine engineering activities segment in the People’s Republic of China

was discontinued during the fi nancial year (Note 10).

2. Signifi cant accounting policies

2.1 Basis of preparation

These fi nancial statements have been prepared in accordance with Singapore Financial Reporting

Standards (“FRS”) under the historical cost convention, except as disclosed in the accounting policies

below.

The preparation of fi nancial statements in conformity with FRS requires management to exercise its

judgement in the process of applying the Group’s accounting policies. It also requires the use of certain

critical accounting estimates and assumptions. The areas involving a higher degree of judgement or

complexity, or areas where assumptions and estimates are signifi cant to the fi nancial statements are

disclosed in Note 3.

Interpretations and amendments to published standards effective in 2017

On 1 January 2017, the Group adopted the new or amended FRS and Interpretations of FRS (“INT

FRS”) that are mandatory for application for the fi nancial year. Changes to the Group’s accounting

policies have been made as required, in accordance with the transitional provisions in the respective FRS

and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the

accounting policies of the Group and the Company and had no material effect on the amounts reported

for the current or prior fi nancial years except for the following:

FRS 7 Statement of cash fl ows

The amendments to FRS 7 Statement of cash fl ows (Disclosure initiative) sets out required disclosures

that enable users of fi nancial statements to evaluate changes in liabilities arising from fi nancing activities,

including both changes arising from cash fl ows and non-cash changes.

The Group has included the additional required disclosures in Consolidated Statement of Cash Flows to

the Financial Statement.


NOTES TO THEFINANCIAL STATEMENTSFor the fi nancial year ended 31 December 2017


2. Signifi cant accounting policies (continued)

2.2 Revenue recognition

Sales comprise the fair value of the consideration received or receivable for the sale of goods and

rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of value-

added tax, rebates and discounts, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured,

it is probable that the collectability of the related receivables is reasonably assured and when the specifi c

criteria for each of the Group’s activities are met as follows:

(a) Rendering of services

(i) Ship repair, ship building and marine engineering

Revenue from ship repair, ship building, marine engineering, container repairs and services,

fabrication work services and production of marine outfi tting components is recognised

on the percentage-of-completion method based on progress of the contract work, where

the outcome of the contract can be estimated reliably. If the contract covers a number

of projects and the cost and revenue of such individual projects can be identifi ed within

the terms of the overall contract, each such project is treated as a separate contract.

Provision is made in full where applicable for expected losses on contracts in progress.

Please refer to Note 2.7 “Construction contracts” for the accounting policy on revenue from

construction contracts for ship building and marine engineering.

(ii) Charter hire

Revenue from time charter is recognised on a straight-line basis over the period of the time

charter agreement.

Revenue from voyage charter is recognised rateably over the estimated length of the

voyage within the reporting period and ends in the subsequent reporting period.

The Group determines the percentage of completion of voyage freight using the discharge-

to-discharge method. Under this method, voyage revenue is recognised rateably over the

period from the departure of a vessel from its original discharge port to departure from the

next discharge port.

Demurrage is included if a claim is considered probable. Losses arising from time or voyage

charters are provided for as soon as they are anticipated.

(b) Rental income

Rental income from operating leases is recognised on a straight-line basis over the lease term.

(c) Sale of scrap materials

Income from sale of scrap materials is recognised when the products have been delivered to the

customer, the customer has accepted the products and collectability of the related receivables is

reasonably assured.






2.2 Revenue recognition (continued)

(d) Interest income

Interest income is recognised using the effective interest method.

(e) Dividend income

Dividend income is recognised when the right to receive payment is established.

2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control.

The Group controls an entity when the Group is exposed to, or has rights to, variable

returns from its involvement with the entity and has the ability to affect those returns

through its power over the entity. Subsidiaries are fully consolidated from the date on which

control is transferred to the Group. They are deconsolidated from the date on that control

ceases.

In preparing the consolidated fi nancial statements, transactions, balances and unrealised

gains on transactions between group entities are eliminated. Unrealised losses are also

eliminated unless the transaction provides evidence of an impairment indicator of the

transferred asset. Accounting policies of subsidiaries have been changed where necessary

to ensure consistency with the policies adopted by the Group.

Non-controlling interests comprise the portion of a subsidiary’s net results of operations and

its net assets, which is attributable to the interests that are not owned directly or indirectly

by the equity holders of the Company. They are shown separately in the consolidated

statement of comprehensive income, statement of changes in equity, and balance sheet.

Total comprehensive income is attributed to the non-controlling interests based on their

respective interests in a subsidiary, even if this results in the non-controlling interests having

a defi cit balance.

(ii) Acquisitions

The acquisition method of accounting is used to account for business combinations

entered into by the Group.

The consideration transferred for the acquisition of a subsidiary or business comprises the

fair value of the assets transferred, the liabilities incurred and the equity interests issued

by the Group. The consideration transferred also includes any contingent consideration

arrangement and any pre-existing equity interest in the subsidiary measured at their fair

values at the acquisition date.

Acquisition-related costs are expensed as incurred.





2.3 Group accounting (continued)

(a) Subsidiaries (continued)

(ii) Acquisitions (continued)

Identifi able assets acquired and liabilities and contingent liabilities assumed in a business

combination are, with limited exceptions, measured initially at their fair values at the

acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in

the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s

proportionate share of the acquiree’s identifi able net assets.

The excess of (a) the consideration transferred, the amount of any non-controlling

interest in the acquiree and the acquisition-date fair value of any previous equity interest

in the acquiree over the (b) fair value of the identifi able net assets acquired is recorded

as goodwill. Please refer to Note 2.5 “Intangible assets - Goodwill” for the subsequent

accounting policy on goodwill.

(iii) Disposals

When a change in the Group’s ownership interest in a subsidiary results in a loss of control

over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are

derecognised. Amounts previously recognised in other comprehensive income in respect of

that entity are also reclassifi ed to profi t or loss or transferred directly to retained earnings if

required by a specifi c Standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between

the carrying amount of the retained interest at the date when control is lost and its fair value

is recognised in profi t or loss.

Please refer to Note 2.9 “Investments in subsidiaries” for the accounting policy on

investments in subsidiaries in the separate fi nancial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control

over the subsidiary are accounted for as transactions with equity owners of the Company. Any

difference between the change in the carrying amounts of the non-controlling interest and the fair

value of the consideration paid or received is recognised within equity attributable to the equity

holders of the Company.






2.3 Group accounting (continued)

(c) Associated companies

Associated companies are entities over which the Group has signifi cant infl uence, but not control,

generally accompanied by a shareholding giving rise to voting rights of 20% and above but not

exceeding 50%.

Investments in associated companies are accounted for in the consolidated fi nancial statements

using the equity method of accounting less impairment losses, if any.

(i) Acquisitions

Investments in associated companies are initially recognised at cost. The cost of an

acquisition is measured at the fair value of the assets given, equity instruments issued

or liabilities incurred or assumed at the date of exchange, plus costs directly attributable

to the acquisition. Goodwill on associated companies represents the excess of the cost

of acquisition of the associated company over the Group’s share of the fair value of the

identifi able net assets of the associated company and is included in the carrying amount of

the investments.

(ii) Equity method of accounting

Under the equity method of accounting, the investments are initially recognised at cost

and adjusted thereafter to recognise Group’s share of its associated companies’ post-

acquisition profi ts or losses in profi t or loss and its share of movements of its associated

companies’ other comprehensive income in other comprehensive income. Dividends

received or receivable from the associated companies are recognised as reduction of the

carrying amount of the investments. When the Group’s share of losses in an associated

company equals to or exceeds its interest in the associated company, the Group does

not recognise further losses, unless it has legal or constructive obligations to make, or

has made, payments on behalf of the associated company. If the associated company

subsequently reports profi ts, the Group resumes recognising its share of those profi ts only

after its share of the profi ts equals the share of losses not recognised.

Unrealised gains on transactions between the Group and its associated companies are

eliminated to the extent of the Group’s interest in the associated companies. Unrealised

losses are also eliminated unless the transactions provide evidence of impairment of the

assets transferred. The accounting policies of associated companies are changed where

necessary to ensure consistency with the accounting policies adopted by the Group.

(iii) Disposals

Investments in associated companies are derecognised when the Group loses signifi cant

infl uence. If the retained equity interest in the former associated company is a fi nancial

asset, the retained equity interest is remeasured at fair value. The difference between the

carrying amount of the retained interest at the date when signifi cant infl uence is lost, and its

fair value and any proceeds on partial disposal, is recognised in profi t or loss.





2.4 Property, plant and equipment

(a) Measurement

(i) Land and buildings

Land and buildings are initially recognised at cost. Buildings and leasehold land are

subsequently carried at cost less accumulated depreciation and accumulated impairment

losses.

(ii) Motor vessels

Motor vessels are initially recognised at cost and subsequently carried at cost less

accumulated depreciation and accumulated impairment losses.

The cost of motor vessels includes actual interest incurred on borrowings used to fi nance

the motor vessels while under construction and other direct relevant expenditure incurred

in bringing the vessels into operation. For this purpose, the interest rate applied to funds

provided for constructing the motor vessels is arrived at by reference to the actual rate

payable on borrowings for construction purposes. The capitalisation of interest charges will

cease upon the completion and delivery of the motor vessels.

(iii) Other property, plant and equipment

All other items of property, plant and equipment are initially recognised at cost and

subsequently carried at cost less accumulated depreciation and accumulated impairment

losses.

(iv) Components of costs

The cost of an item of property, plant and equipment initially recognised includes its

purchase price and any cost that is directly attributable to bringing the asset to the

location and condition necessary for it to be capable of operating in the manner intended

by management. Cost also includes borrowing costs that are directly attributable to the

acquisition, construction or production of a qualifying asset (Note 2.6). The projected cost

of dismantlement, removal or restoration is also recognised as part of the cost of property,

plant and equipment if such obligation is incurred either when the item is acquired or as

a consequence of using the asset during a particular period for purposes other than to

produce inventories during that period.






2.4 Property, plant and equipment (continued)

(b) Depreciation

Depreciation of property, plant and equipment is calculated using the straight-line method to

allocate their depreciable amounts over their estimated useful lives as follows:

Useful lives

Leasehold land and buildings 10 - 50 years

Offi ce renovations, furniture, fi xtures and equipment 3 - 5 years

Plant, machinery and equipment 3 - 20 years

Motor vehicles 5 - 10 years

Motor vessels 25 years

Docks and quays 40 - 50 years

No depreciation is provided for construction-in-progress.

The motor vessels are subject to overhauls at regular intervals. The inherent components of

the initial overhaul are determined based on the estimated costs of the next overhaul and are

separately depreciated over a period of two and a half years in order to refl ect the estimated

intervals between two overhauls. The costs of the overhauls subsequently incurred are capitalised

as additions and the carrying amounts of the replaced components are written off to profi t or loss.

The residual values, estimated useful lives and depreciation method of property, plant and

equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of

any revision are recognised in profi t or loss when the changes arise.

(c) Subsequent expenditure

Subsequent expenditure relating to property, plant and equipment that has already been

recognised is added to the carrying amount of the asset only when it is probable that future

economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be

measured reliably. All other repair and maintenance expenses are recognised in profi t or loss when

incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal

proceeds and its carrying amount is recognised in profi t or loss within “other gains and losses”.

2.5 Intangible assets

Goodwill on acquisitions

Goodwill on acquisitions of subsidiaries and businesses, represents the excess of (i) the sum of the

consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-

date fair value of any previous equity interest in the acquiree over (ii) the fair value of the identifi able net

assets acquired.





2.5 Intangible assets (continued)

Goodwill on acquisitions (continued)

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less

accumulated impairment losses.

Goodwill on acquisition of associated companies represents the excess of the cost of the acquisition

over the Group’s share of the fair value of the identifi able net assets acquired. Goodwill on associated

companies is included in the carrying amount of the investments.

Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount

of goodwill relating to the entity sold.

2.6 Borrowing costs

Borrowing costs are recognised in profi t or loss using the effective interest method except for those

costs that are directly attributable to borrowings acquired specifi cally for the construction of motor

vessels, docks and quays. The actual borrowing costs incurred during the construction period less any

investment income on temporary investments of these borrowings, are capitalised in the cost of the

docks and quays.

2.7 Construction contracts

When the outcome of a construction contract can be estimated reliably, contract revenue and contract

costs are recognised as revenue and expenses respectively by reference to the stage of completion of

the contract activity at the balance sheet date (“percentage-of-completion method”). When the outcome

of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of

contract costs incurred that are likely to be recoverable. When it is probable that total contract costs will

exceed total contract revenue, the expected loss is recognised as an expense immediately.

Variations in contract work, claims and incentive payments are included in contract revenue when it is

probable that the customer will approve the variation or negotiations have reached an advanced stage

such that it is probable that the customer will accept the claim and they are capable of being reliably

measured.

The stage of completion is measured by reference to the completion of a physical proportion of the

contract work. Costs incurred during the fi nancial year in connection with future activity on a contract are

shown as “construction contract work-in-progress” on the balance sheet unless it is not probable that

such contract costs are recoverable from the customers, in which case, such costs are recognised as

an expense immediately.

At the balance sheet date, the cumulative costs incurred plus recognised profi ts (less recognised losses)

on each contract is compared against the progress billings. Where the cumulative costs incurred plus

the recognised profi ts (less recognised losses) exceed progress billings, the balance is presented as

due from customers on construction contracts within “trade and other receivables”. Where progress

billings exceed cumulative costs incurred plus recognised profi ts (less recognised losses), the balance is

presented as due to customers on construction contracts within “trade and other payables”.

Progress billings not yet paid by customers and retentions by customers are included within “trade and

other receivables”. Advances received are included within “trade and other payables”.






2.8 Investment properties

Investment properties include those portions of offi ce buildings that are held for long-term rental yields

and/or for capital appreciation.

Investment properties are initially recognised at cost and subsequently carried at cost less accumulated

depreciation and accumulated impairment losses. Depreciation is calculated using the straight-

line method to allocate the depreciable amounts over the estimated useful lives of 10 to 50 years.

The residual values, useful lives and depreciation method of investment properties are reviewed, and

adjusted as appropriate, at each balance sheet date. The effects of any revision are included in profi t or

loss when the changes arise.

Investment properties are subject to renovations or improvements at regular intervals. The cost of major

renovations and improvements is capitalised and the carrying amounts of the replaced components are

recognised in profi t or loss. The cost of maintenance, repairs and minor improvements is recognised in

profi t or loss when incurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying

amount is recognised in profi t or loss.

2.9 Investments in subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s

balance sheet. On disposal of such investments, the difference between disposal proceeds and the

carrying amounts of the investments are recognised in profi t or loss.

2.10 Impairment of non-fi nancial assets

(a) Goodwill

Goodwill recognised separately as an intangible asset is tested for impairment annually, and

whenever there is indication that the goodwill may be impaired. Goodwill included in the

carrying amount of an investment in associated company is tested for impairment as part of the

investment, rather than separately.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s

cash-generating unit (“CGU”) expected to benefi t from synergies arising from the business

combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill,

exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of

the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated fi rst to reduce the carrying amount of goodwill

allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the

carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent

period.





2.10 Impairment of non-fi nancial assets (continued)

(b) Property, plant and equipment

Investment properties

Investments in subsidiaries and associated companies

Property, plant and equipment, investment properties and investments in subsidiaries and

associated companies are tested for impairment whenever there is any objective evidence or

indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less

cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does

not generate cash infl ows that are largely independent of those from other assets. If this is the

case, the recoverable amount is determined for the CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount,

the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an

impairment loss in profi t or loss, unless the asset is carried at revalued amount, in which case,

such impairment loss is treated as a revaluation decrease.

An impairment loss for an asset other than goodwill is reversed only if, there has been a change

in the estimates used to determine the asset’s recoverable amount since the last impairment loss

was recognised. The carrying amount of this asset is increased to its revised recoverable amount,

provided that this amount does not exceed the carrying amount that would have been determined

(net of any accumulated amortisation or depreciation) had no impairment loss been recognised for

the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in profi t or loss, unless

the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation

increase. However, to the extent that an impairment loss on the same revalued asset was

previously recognised as an expense, a reversal of that impairment is also recognised in profi t or

loss.

2.11 Financial assets

(a) Classifi cation

The Group classifi es its fi nancial assets in the following categories: loans and receivables and

available-for-sale fi nancial assets. The classifi cation depends on the purpose for which the

assets were acquired. Management determines the classifi cation of its fi nancial assets at initial

recognition.

(i) Loans and receivables

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable

payments that are not quoted in an active market. They are presented as current assets,

except for those expected to be realised later than 12 months after the balance sheet date

which are presented as non-current assets. Loans and receivables are presented as “trade

and other receivables” (Note 13 and 17) and “cash and cash equivalents” (Note 12) and

“other current assets - deposits” (Note 16) on the balance sheet.






2.11 Financial assets (continued)

(a) Classifi cation (continued)

(ii) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are non-derivatives that are either designated in this

category or not classifi ed in any of the other categories. They are presented as non-current

assets unless the investment matures or management intends to dispose of the assets

within 12 months after the balance sheet date.

(b) Recognition and derecognition

Regular way purchases and sales of fi nancial assets are recognised on trade date – the date on

which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial assets

have expired or have been transferred and the Group has transferred substantially all risks and

rewards of ownership. On disposal of a fi nancial asset, the difference between the carrying

amount and the sale proceeds is recognised in profi t or loss. Any amount previously recognised in

other comprehensive income relating to that asset is reclassifi ed to profi t or loss.

Trade receivables that are factored out to banks and other fi nancial institutions with recourse to

the Group are not derecognised until the recourse period has expired and the risks and rewards

of the receivables have been fully transferred. The corresponding cash received from the fi nancial

institutions is recorded as borrowings.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for fi nancial

assets at fair value through profi t or loss, which are recognised at fair value. Transaction costs for

fi nancial assets at fair value through profi t or loss are recognised immediately as expenses.

(d) Subsequent measurement

Available-for-sale fi nancial assets and fi nancial assets at fair value through profi t or loss are

subsequently carried at fair value. Loans and receivables and held-to-maturity fi nancial assets are

subsequently carried at amortised cost using the effective interest method.

Changes in the fair values of fi nancial assets at fair value through profi t or loss including the effects

of currency translation, interest and dividends, are recognised in profi t or loss when the changes

arise.

Interest and dividend income on available-for-sale fi nancial assets are recognised separately in

income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items)

denominated in foreign currencies are analysed into currency translation differences on the

amortised cost of the securities and other changes; the currency translation differences are

recognised in profi t or loss and the other changes are recognised in other comprehensive

income and accumulated in the fair value reserve. Changes in the fair values of available-for-sale

equity securities (i.e. non-monetary items) are recognised in other comprehensive income and

accumulated in the fair value reserve, together with the related currency translation differences.





2.11 Financial assets (continued)

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that

a fi nancial asset or a group of fi nancial assets is impaired and recognises an allowance for

impairment when such evidence exists.

(i) Loans and receivables

Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy

and default or signifi cant delay in payments are objective evidence that these fi nancial

assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment

allowance account which is calculated as the difference between the carrying amount and

the present value of estimated future cash fl ows, discounted at the original effective interest

rate. When the asset becomes uncollectible, it is written off against the allowance account.

Subsequent recoveries of amounts previously written off are recognised against the same

line item in profi t or loss.

The impairment allowance is reduced through profi t or loss in a subsequent period when

the amount of impairment loss decreases and the related decrease can be objectively

measured. The carrying amount of the asset previously impaired is increased to the extent

that the new carrying amount does not exceed the amortised cost had no impairment been

recognised in prior periods.

(ii) Available-for-sale fi nancial assets

In addition to the objective evidence of impairment described in Note 2.11(e)(i), a signifi cant

or prolonged decline in the fair value of an equity security below its cost is considered as an

indicator that the available-for-sale fi nancial asset is impaired.

If there is objective evidence of impairment, the cumulative loss that had been recognised

in other comprehensive income is reclassifi ed from equity to profi t or loss. The amount of

cumulative loss that is reclassifi ed is measured as the difference between the acquisition

cost (net of any principal repayments and amortisation) and the current fair value, less

any impairment loss on that fi nancial asset previously recognised in profi t or loss. The

impairment losses recognised as an expense for an equity security are not reversed

through profi t or loss in subsequent period.

2.12 Offsetting fi nancial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is

a legally enforceable right to offset and there is an intention to settle on a net basis or realise the asset

and settle the liability simultaneously.






2.13 Financial guarantees

The Company issues corporate guarantees to banks for borrowings of its subsidiaries and third parties

for services provided to a subsidiary. These guarantees are fi nancial guarantees as they require the

Company to reimburse the banks and third parties if the subsidiaries fail to make principal or interest

payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s

balance sheet.

Financial guarantees are subsequently amortised to profi t or loss over the period of the subsidiaries’

borrowings, unless it is probable that the Company will reimburse the banks for an amount higher than

the unamortised amount. In this case, the fi nancial guarantees shall be carried at the expected amount

payable to the banks in the Company’s balance sheet.

Intra-group transactions are eliminated on consolidation.

The Company does not have any fi nancial guarantees for the current and previous fi nancial year.

2.14 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer

settlement for at least 12 months after the balance sheet date, in which case they are presented as non-

current liabilities.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at

amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption

value is recognised in profi t or loss over the period of the borrowings using the effective interest method.

2.15 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to

the end of fi nancial year which are unpaid. They are classifi ed as current liabilities if payment is due

within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are

presented as non-current liabilities.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost

using the effective interest method.

2.16 Fair value estimation of fi nancial assets and liabilities

The fair values of fi nancial instruments traded in active markets (such as exchange-traded and over-the-

counter securities and derivatives) are based on quoted market prices at the balance sheet date. The

quoted market prices used for fi nancial assets are the current bid prices; the appropriate quoted market

prices used for fi nancial liabilities are the current asking prices.

The fair values of fi nancial instruments that are not traded in an active market are determined by using

valuation techniques. The Group uses a variety of methods and makes assumptions based on market

conditions that are existing at each balance sheet date. Where appropriate, quoted market prices or

dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash fl ow

analysis, are also used to determine the fair values of the fi nancial instruments.





2.16 Fair value estimation of fi nancial assets and liabilities (continued)

The fair values of currency forwards are determined using actively quoted forward exchange rates.

The fair values of current fi nancial assets and liabilities carried at amortised cost approximate their

carrying amounts.

2.17 Leases

(a) When the Group is the lessee:

The Group leases certain property, plant and equipment from non-related parties.

Lessee - Operating leases

Leases of property, plant and equipment where substantially all risks and rewards incidental to

ownership are retained by the lessors are classifi ed as operating leases. Payments made under

operating leases (net of any incentives received from the lessors) are recognised in profi t or loss

on a straight-line basis over the period of the lease.

(b) When the Group is the lessor:

The Group leases certain items of property, plant and equipment and investment properties to

non-related parties and related parties.

Lessor - Operating leases

Leases of property, plant and equipment and investment properties where the Group retains

substantially all risks and rewards incidental to ownership are classifi ed as operating leases. Rental

income from operating leases is recognised in profi t or loss on a straight-line basis over the lease

term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added

to the carrying amount of the leased asset and recognised as an expense in profi t or loss over the

lease term on the same basis as the lease income.

2.18 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined using the

weighted average method. The cost of fi nished goods and work-in-progress comprises raw materials,

direct labour, other direct costs and related production overheads (based on normal operating capacity)

but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of

business, less the estimated costs of completion and applicable variable selling expenses.

2.19 Income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid

to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or

substantively enacted by the balance sheet date.






2.19 Income taxes (continued)

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the fi nancial statements except when the deferred income tax

arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business

combination and affects neither accounting nor taxable profi t or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in

subsidiaries and associated companies, except where the Group is able to control the timing of the

reversal of the temporary difference and it is probable that the temporary difference will not reverse in the

foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profi t will be

available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised

or the deferred income tax liability is settled, based on tax rates and tax laws that have been

enacted or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at

the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities except

for investment properties. Investment property measured at fair value is presumed to be recovered

entirely through sale.

Current and deferred income taxes are recognised as income or expense in profi t or loss, except to the

extent that the tax arises from a business combination or a transaction which is recognised directly in

equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.

The Group accounts for investment tax credits (for example, productivity and innovative credit) similar

to accounting for other tax credits where deferred tax asset is recognised for unused tax credits to the

extent that it is probable that future taxable profi t will be available against which the unused tax credit

can be utilised.

2.20 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of

past events, it is more likely than not that an outfl ow of resources will be required to settle the obligation

and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

The Group recognises the estimated liability to repair or replace products still under warranty at the

balance sheet date. This provision is calculated based on estimates by technical engineers and historical

experience of the level of repairs and replacements.

Other provisions are measured at the present value of the expenditure expected to be required to settle

the obligation using a pre-tax discount rate that refl ects the current market assessment of the time value

of money and the risks specifi c to the obligation. The increase in the provision due to the passage of

time is recognised in profi t or loss as fi nance expense.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profi t or

loss when the changes arise.





2.21 Employee compensation

Employee benefi ts are recognised as an expense, unless the cost qualifi es to be capitalised as an asset.

(a) Defi ned contribution plans

Defi ned contribution plans are post-employment benefi t plans under which the Group pays fi xed

contributions into separate entities such as the Central Provident Fund and social security plans in

the People’s Republic of China (“PRC”) on a mandatory, contractual or voluntary basis. The Group

has no further payment obligations once the contributions have been paid.

(b) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A

provision is made for the estimated liability for annual leave as a result of services rendered by

employees up to the balance sheet date.

(c) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The value of the

employee services received in exchange for the grant of the options is recognised as an expense

with a corresponding increase in the share option reserve over the vesting period. The total

amount to be recognised over the vesting period is determined by reference to the fair value of

the options granted on the date of the grant. Non-market vesting conditions are included in the

estimation of the number of shares under options that are expected to become exercisable on the

vesting date. At each balance sheet date, the Group revises its estimates of the number of shares

under options that are expected to become exercisable on the vesting date and recognises the

impact of the revision of the estimates in profi t or loss, with a corresponding adjustment to the

share option reserve over the remaining vesting period.

When the options are exercised, the proceeds received (net of transaction costs) are credited to

share capital account when new ordinary shares are issued.

2.22 Currency translation

(a) Functional and presentation currency

Items included in the fi nancial statements of each entity in the Group are measured using the

currency of the primary economic environment in which the entity operates (“functional currency”).

The fi nancial statements are presented in Singapore Dollars (“$”), which is the functional currency

of the Company.

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated

into the functional currency using the exchange rates at the dates of the transactions. Currency

exchange differences resulting from the settlement of such transactions and from the translation

of monetary assets and liabilities denominated in foreign currencies at the closing rates at

the balance sheet date are recognised in profi t or loss. However, in the consolidated fi nancial

statements, currency translation differences arising from borrowings in foreign currencies

and other currency instruments designated and qualifying as net investment hedges and net

investment in foreign operations, are recognised in other comprehensive income and accumulated

in the currency translation reserve.






2.22 Currency translation (continued)

(b) Transactions and balances (continued)

When a foreign operation is disposed of or any loan forming part of the net investment of the

foreign operation is repaid, a proportionate share of the accumulated currency translation

differences is reclassifi ed to profi t or loss, as part of the gain or loss on disposal.

Foreign exchange gains and losses that relate to borrowings are presented in the income

statement within “fi nance cost”. Foreign exchange gains and losses that impact profi t or loss are

presented in profi t or loss within “other gains and losses”.

Non-monetary items measured at fair values in foreign currencies are translated using the

exchange rates at the date when the fair values are determined.

(c) Translation of Group entities’ fi nancial statements

The results and fi nancial position of all the Group entities (none of which has the currency of a

hyperinfl ationary economy) that have a functional currency different from the presentation currency

are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing exchange rates at the reporting date;

(ii) income and expenses are translated at average exchange rates (unless the average is not a

reasonable approximation of the cumulative effect of the rates prevailing on the transaction

dates, in which case, income and expenses are translated using the exchange rates at the

dates of the transactions); and

(iii) all resulting currency translation differences are recognised in other comprehensive income

and accumulated in the currency translation reserve. The currency translation differences

are reclassifi ed to profi t or loss on disposal or partial disposal of the entity giving rise to

such reserve.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as

assets and liabilities of the foreign operations and translated at the closing rates at the reporting

date.

2.23 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to

the executive committee whose members are responsible for allocating resources and assessing

performance of the operating segments.

2.24 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash fl ows, cash and cash equivalents

include cash on hand, deposits with fi nancial institutions which are subject to an insignifi cant risk of

change in value and bank overdrafts and exclude pledged deposits with fi nancial institutions. Bank

overdrafts are presented as current borrowings on the balance sheet. For cash subjected to restriction,

assessment is made on the economic substance of the restriction and whether they meet the defi nition

of cash and cash equivalents.





2.25 Share capital

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issuance of new

ordinary shares are deducted against the share capital account.

2.26 Dividends to Company’s shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.

2.27 Government grants

Grants from the government are recognised as a receivable at their fair value when there is reasonable

assurance that the grant will be received and the Group will comply with all the attached conditions.

Government grants receivable are recognised as income over the periods necessary to match them with

the related costs which they are intended to compensate, on a systematic basis. Government grants

relating to expenses are shown separately as other income.

Government grants relating to assets are deducted against the carrying amount of the assets.

2.28 Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of, or that is

classifi ed as held-for-sale and:

(a) represents a separate major line of business or geographical area of operations; or

(b) is part of a single co-ordinated plan to dispose of a separate major line of business or

geographical area of operations; or

(c) is a subsidiary acquired exclusively with a view to resale.

3. Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical

experience and other factors, including expectations of future events that are believed to be reasonable

under the circumstances.

The critical accounting estimates, assumptions and judgements were made in determining the loss after

tax from discontinued operations, and the carrying amounts of assets and liabilities disposed of which

consequently determines the after-tax gain recognised on the disposal of COSCO Shipyard Group Co.,

Ltd., COSCO (Dalian) Shipyard Co., Ltd., and COSCO (Nantong) Shipyard Co., Ltd. (collectively the

“Disposal Group”).





3. Critical accounting estimates, assumptions and judgements (continued)

These accounting estimates, assumptions and judgements are not expected to have a signifi cant risk of

resulting in a material adjustment within the next fi nancial year.

(a) Construction contracts

For construction contracts, management has estimated the physical proportion of the contract

work completed, which are used to measure the percentage-of-completion (“POC”) for the

Disposal Group’s recognition of construction revenue and construction cost. When it is probable

that the total contract costs will exceed the total construction revenue, a provision for foreseeable

losses is recognised as expense immediately.

Signifi cant judgements are used to estimate the POC and total contract costs. In making

these estimates, management has relied on the expertise of the Disposal Group’s engineers to

determine the progress of the construction, past experience of completed projects, and industry

practices.

During the fi nancial year ended 31 December 2017, the Disposal Group recognized revenue and

cost based on the POC method amounting to $1,588,294,000 and $1,545,635,000 respectively

(2016: $2,516,854,000 and $2,828,181,000 respectively) as disclosed in Note 10.

(b) Impairment of trade and other receivables

Management reviews its trade and other receivables for objective evidence of impairment regularly.

Management considers factors such as amendments to contract terms, deferral of delivery dates

of vessels, signifi cant fi nancial diffi culties of the debtor, the probability that the debtor will enter

bankruptcy, and default or signifi cant delay in payments by the debtor.

In determining this, management has considered the possibility of discontinuance of the

contracts, whether there is observable data indicating that there has been a signifi cant change

in the payment ability of the debtor, or whether there have been signifi cant changes with adverse

effect in the technological, market, economic or legal environment in which the debtor operates in.

Where there is objective evidence of impairment, management has made estimated the

impairment based on historical loss experience for assets with similar credit risk characteristics

or engaged external valuers to assist management in estimating the recoverable amount of these

trade and other receivables.

Management believed that the allowance for impairment of trade and other receivables recognised

is adequate for based on their best estimates of the difference between the recoverable amount

and carrying amount of trade receivables individually determined to be impaired.

During the fi nancial year ended 31 December 2017, the Disposal Group had recognised a reversal

for impairment of trade and other receivables amounting to $93,536,000 (2016: allowance for

impairment of trade and other receivables of $180,282,000).

As at disposal date and 31 December 2016, the trade and other receivables balance of the

Disposal Group amounted to $3,849,319,000 (Gross amount of $4,259,662,000 allowance

for impairment of receivables of $410,343,000) and $4,517,957,000 (Gross amount of

$5,061,292,000 allowance for impairment of receivables of $543,335,000) respectively.




3. Critical accounting estimates, assumptions and judgements (continued)

(c) Net realisable value of inventories work-in-progress

The Disposal Group held certain vessels as inventories work-in-progress.

In estimating the net realisable value of these inventories, management has estimated the selling

price of these inventories based on external valuation reports. In addition, the estimated cost of

completion and the applicable variable selling expenses were considered in determining the net

realisable value of these inventories.

During the fi nancial year ended 31 December 2017, the Disposal Group had written down

inventories based on their estimation of the net realisable value of these inventories amounting to

$46,198,000 (2016: $283,379,000) as disclosed in Note 14.

As at disposal date and 31 December 2016, the Disposal Group held certain vessels as

inventories work-in-progress with carrying value of $1,008,833,000 (Gross amount of

$1,451,818,000, provision for write-down of inventories WIP of $442,985,000) and $618,557,000

(Gross amount of $1,024,522,000, provision for write-down of inventories WIP of $405,965,000)

respectively.

(d) Recoverability of deferred income tax assets

Deferred tax assets are recognised due to deductible temporary differences and tax losses of the

Disposal Group. Under PRC’s tax legislation, tax losses can only be carried forward for the next

fi ve years, beginning from the date such tax losses have been incurred, to offset future taxable

profi ts.

Management reviews the recoverability of these deferred tax assets based on their assessment of

the future taxable profi ts these subsidiaries could generate for the next fi ve years and recognised

deferred tax assets to the extent that it is probable that there will be suffi cient future taxable profi ts

within the next fi ve years available against which the deductible temporary differences and tax

losses can be utilised. Signifi cant judgements and assumptions are involved in estimating the

suffi ciency of future taxable profi t.

During the fi nancial year ended 31 December 2017, the Disposal Group had derecognised

deferred tax assets amounting to $66,708,000 (2016: $91,554,000) as management had

assessed and deemed these amount of deferred tax assets to be irrecoverable in the foreseeable

future.

As at disposal date and 31 December 2016, the Disposal Group had recognised deferred tax

assets amounting to $86,928,000 and $140,598,000 respectively as disclosed in Note 12 and

Note 29 respectively.





4. Revenue

The Group2017 2016

$’000 $’000

(restated)

Rendering of services

- Ship repair and marine engineering 9,880 9,994

- Charter hire 26,739 29,703

Others 567 808

Total sales 37,186 40,505

5. Expenses by nature

The Group2017 2016

$’000 $’000

(restated)

Allowance for impairment of property, plant and equipment (Note 23) – 6,608

Amortisation of deferred expenditure 37 37

Audit fee 1,210 1,258

Raw materials, fi nished goods, consumables and other overheads 1,524 1,786

Changes in inventories and work-in-progress 1,117 (192)

Crew overheads 6,191 11,139

Depreciation of investment properties and property,

plant and equipment (Notes 22 and 23) 5,427 12,558

Director and employee compensation (Note 6) 8,076 9,039

Insurance 1,332 2,296

Non-audit service fees paid/payable to auditor of the Company 695 42

Professional fees 5,708 385

Rental expense on operating leases 2,343 687

Repairs and maintenance 307 254

Sub-contractor expenses 2,432 2,738

Vessel overheads 4,681 12,899

Write-off of property, plant and equipment – 360

Other expenses 521 3,439

Total cost of sales, distribution and administrative expenses 41,601 65,333




6. Director and employee compensation

The Group2017 2016

$’000 $’000

(restated)

Wages, salaries and staff benefi ts 239,421 329,696

Employer’s contribution to defi ned contribution plans 27,286 35,407

Directors’ fees of the Company 244 244

266,951 365,347

Less: Amounts attributable to discontinued operations (258,875) (356,308)

Amounts attributable to continuing operations (Note 5) 8,076 9,039

7. Other income

The Group2017 2016

$’000 $’000

(restated)

Compensation income from customers – 766

Government grants 62 78

Interest income 1,069 795

Rental income 605 469

Sale of scrap materials 13 39

Sundry income 343 13

2,092 2,160

8. Other gains and losses

The Group2017 2016

$’000 $’000

(restated)

Currency exchange loss - net (2,347) (1,378)

Loss on disposal of property, plant and equipment (22,398) (1,878)

Gain on sale of bunker stock 419 453

(24,326) (2,803)





9. Income taxes

(a) Income tax expense

The Group2017 2016

$’000 $’000

(restated)

Tax expense attributable to profi t or loss is made up of:

- Profi t or loss for the fi nancial year:

From continuing operations

Current income tax

- Singapore 565 497

Deferred income tax (Note 29)

- Singapore (1) –

564 497

From discontinued operations

Current income tax

- Foreign 11,386 13,202

Deferred income tax (Note 29)

- Foreign 51,651 86,048

63,037 99,250

- (Over)/under provision in prior fi nancial years:

From continuing operations

Current income tax

- Singapore (158) 25

From discontinued operations

Current income tax

- Foreign 34 (1,514)

Deferred Income tax (Note 29)

- Foreign (121) 61

63,356 98,319

Income tax expense attributable to:

- continuing operations 406 522

- discontinued operations (Note 10(a)) 62,950 97,797

63,356 98,319




9. Income taxes (continued)

(a) Income tax expense (continued)

The tax on the Group’s loss before tax differs from the theoretical amount that would arise using

the Singapore standard rate of income tax as follows:

The Group2017 2016

$’000 $’000

(restated)

(Loss)/profi t before tax from:

- continuing operations (26,649) (25,471)

- discontinued operations (Note 10(a)) 229,825 (852,294)

203,176 (877,765)

Share of loss of associated companies, net of tax 284 250

Profi t/(loss) before tax and share of loss of associated companies 203,460 (877,515)

Tax calculated at a tax rate of 17% (2016: 17%) 34,588 (149,178)

Effects of:

- different tax rates in other countries (5,222) 4,571

- tax incentives (3,980) (3,712)

- income not subject to tax (56,161) (129)

- expenses not deductible for tax purposes 12,676 46,999

- utilisation of previously unrecognised tax losses (5,290) (40,676)

- deferred tax assets not recognised 20,276 150,350

- derecognition of deferred tax assets recognised previously 66,708 91,554

- over provision of current income tax in prior years (124) (1,489)

- (over)/under provision of deferred income tax in prior years (121) 61

- others 6 (32)

Tax charge 63,356 98,319

(b) The tax (charge)/credit relating to each component of other comprehensive income is as follows:

2017 2016

Before tax

Tax charge

Aftertax

Before

tax

Tax

credit

After

Tax

$’000 $’000 $’000 $’000 $’000 $’000

Fair value gain on

available-for-sale

fi nancial assets 61 (15) 46 (76) 19 (57)

Currency translation

differences arising

from consolidation (2,327) – (2,327) (40,446) – (40,446)

Other comprehensive (loss)/income (2,266) (15) (2,281) (40,522) 19 (40,503)





10. Discontinued operations

In August 2017, the Group’s shareholders approved the sale of the Company’s entire equity interest in

COSCO Shipyard Group Co., Ltd., COSCO (Dalian) Shipyard Co., Ltd. and COSCO (Nantong) Shipyard

Co., Ltd. (collectively the “Disposal Group”), which constituted the Group’s ship repair, ship building and

marine engineering activities segment in the PRC, to a fellow subsidiary.

The transfers of shareholdings of COSCO Shipyard Group Co., Ltd. and COSCO (Dalian) Shipyard

Co., Ltd. were effected in October 2017 and COSCO (Nantong) Shipyard Co., Ltd. in November 2017.

Accordingly, these 3 entities ceased to be subsidiaries of the Company on these dates.

(a) The summarised fi nancial information of the discontinued operations are as follows:

Group2017 2016$’000 $’000

Sales 1,588,294 2,516,854Cost of sales (1,545,635) (2,828,181)Gross profi t/(loss) 42,659 (311,327)

Other income 60,102 86,473Other gains and losses (27,821) (29,005)

Expenses - Distribution (34,645) (56,640) - Administrative (4,929) (316,761) - Finance (189,621) (224,784)

Share of loss of associated companies (284) (250)Loss before income tax (154,539) (852,294)

Tax expense (52,186) (97,797)Loss after tax from discontinued operations (206,725) (950,091)

Pre-tax gain recognised on the disposal of subsidiaries 384,364 –Tax expense (10,764) –

After-tax gain recognised on the disposal of subsidiaries 373,600 –

Profi t/(loss) for the year from discontinued operations 166,875 (950,091)

(b) The impact of the discontinued operations on the cash fl ows of the Group is as follows:

Group2017 2016

$’000 $’000

Net cash provided by/(used in) operating activities 335,459 (428,114)

Net cash provided by/(used in) investing activities 9,510 (1,432)

Net cash (used in)/provided by fi nancing activities (539,491) 421,519

Total cash outfl ows (194,522) (8,027)




11. Earnings per share

(a) Basic earnings per share

Basic earnings per share is calculated by dividing the net (loss)/profi t attributable to equity holders

of the Company by the weighted average number of ordinary shares outstanding during the

fi nancial year.


Discontinuedoperations Total

2017 2016 2017 2016 2017 2016

Net (loss)/profi t attributable

to equity holders of the

Company ($’000) (27,248) (26,128) 291,124 (440,371) 263,876 (466,499)

Weighted average

number of ordinary shares

outstanding for basic

earnings per share (‘000) 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245

Basic earnings per share

(cents per share) (1.22) (1.16) 13.00 (19.67) 11.78 (20.83)

(b) Diluted earnings per share

For the purpose of calculating diluted earnings per share, net (loss)/profi t attributable to equity

holders of the Company and the weighted average number of ordinary shares outstanding is

adjusted for the effects of all dilutive potential ordinary shares arising from share options.

For share options, the weighted average number of shares on issue has been adjusted as if all

dilutive share options were exercised. The number of shares that could have been issued upon

the exercise of all dilutive share options less the number of shares that could have been issued at

fair value (determined as the Company’s average share price for the fi nancial year) for the same

total proceeds is added to the denominator as the number of shares issued for no consideration.

The outstanding share options do not have any dilutive effect on the earnings per share as the

exercise prices for the outstanding share options were higher than the average market price

during the current fi nancial period reported on and the corresponding period of the immediately

preceding fi nancial year. No adjustment is made to the net (loss)/profi t.





11. Earnings per share (continued)

(b) Diluted earnings per share (continued)

Diluted earnings per share attributable to equity holders of the Company are calculated as follows:


Discontinuedoperations Total

2017 2016 2017 2016 2017 2016

Net (loss)/profi t attributable

to equity holders of the

Company ($’000) (27,248) (26,128) 291,124 (440,371) 263,876 (466,499)

Weighted average


outstanding for basic

earnings per share (‘000) 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245

Weighted average


outstanding for diluted

earnings per share (’000) 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245 2,239,245

Diluted earnings per share

(cents per share) (1.22) (1.16) 13.00 (19.67) 11.78 (20.83)

12. Cash and cash equivalents

Cash and cash equivalents at the end of the fi nancial year comprise the following:

The Group The Company2017 2016 2017 2016

$’000 $’000 $’000 $’000

Cash at bank and on hand 50,462 550,531 35,995 1,463

Short-term bank deposits 8,042 969,844 – 28,405

58,504 1,520,375 35,995 29,868

Cash at bank and short-term bank deposits include an amount of $Nil (2016: $324,824,000) placed with a fellow subsidiary, COSCO Finance Co., Ltd..

For the purpose of presenting the consolidated statement of cash fl ows, cash and cash equivalents comprise the following:

The Group2017 2016

$’000 $’000

Cash and bank balances (as above) 58,504 1,520,375

Less: Bank deposits pledged – (1,977)

Cash and cash equivalents per consolidated statement of cash fl ows 58,504 1,518,398

In 2016, cash and bank balances and short-term bank deposits of the Group amounting to $1,977,000 were pledged as security for trade fi nance facilities.




12. Cash and cash equivalents (continued)

Restricted Cash

On 3 November 2017, the Company made a voluntary conditional cash offer (the “Offer”) to acquire

100% equity interest in Cogent Holdings Limited for a consideration of $488,070,000 as disclosed

in Note 33(a). A restricted bank balance amounting to $140,660,000 is held in an account which is

earmarked for the sole purpose of the Offer and is not freely remissible for use by the Group.

Disposal of subsidiaries

The Company has disposed its entire equity interest in the Disposal Group for a sales consideration of

$290,046,000 (net of tax). The consideration is recognised as other receivables from a fellow subsidiary

as included in Note 13. The effects of the disposal on the cash fl ows of the Group were:

Group2017$’000

Carrying amounts of assets and liabilities disposed of:

Cash and cash equivalents 1,145,125Trade and other receivables 3,849,319Inventories 1,218,693Construction contract work-in-progress (Note 15) 158,223Income tax receivables 1,854Other current assets 10,139Available-for-sale fi nancial assets (Note 18) 4,602Investments in associated companies (Note 20) 3,845Investment properties (Note 22) 3,455Property, plant and equipment (Note 23) 2,267,225Intangible assets (Note 24) 9,523Deferred expenditure 1,929Deferred income tax assets (Note 29) 86,928Total assets 8,760,860

Trade and other payables 2,164,685Current income tax liabilities 477Borrowings 6,621,733Provisions (Note 28(b)) 116,040Deferred income tax liabilities (Note 29) 148Total liabilities 8,903,083

Net liabilities derecognised (142,223)Non-controlling interests 138,700Net liabilities disposed of (3,523)





12. Cash and cash equivalents (continued)

Disposal of subsidiaries (continued)

The aggregate cash outfl ows arising from the disposal of COSCO Shipyard Group Co., Ltd., COSCO

(Nantong) Shipyard Co., Ltd. and COSCO (Dalian) Shipyard Co., Ltd. were:

Group 2017$’000

Net liabilities disposed of (as above) (3,523)Reclassifi cation of currency translation reserve (Note 31(b)(iii)) (79,799)Reclassifi cation of fair value reserves (Note 31(b)(iv)) (232)After-tax gain recognised on the disposal of subsidiaries (Note 10) 373,600Sales consideration from disposal 290,046Less: Due from a fellow subsidiary (290,046)Less: Cash and cash equivalents in subsidiaries disposed of (1,145,125)Add: Bank deposits pledged by subsidiaries disposed of 1,130Net cash outfl ow on disposal (1,143,995)




13. Trade and other receivables - current


$’000 $’000 $’000 $’000

Trade receivables:

- Non-related parties (i) 6,033 527,023 – –

- Fellow subsidiaries 1,681 14,347 – –

- Associated companies – 52 – –

7,714 541,422 – –

Less: Allowance for impairment of

receivables

- Non-related parties – (41,177) – –

Trade receivables – net 7,714 500,245 – –

Construction contracts due from

customers (Note 15):

- Non-related parties (i) – 4,230,131 – –

Less: Allowance for impairment of

receivables


– 3,741,162 – –

Other receivables:

- Non-related parties 43 48,111 – 2

- Fellow subsidiaries (ii) 290,134 1,494 290,134 –

- Associated companies (ii) – 58 – –

290,177 49,663 290,134 2

Less: Allowance for impairment of other

receivables


290,177 36,474 290,134 2

Advances paid to suppliers – 250,792 – –

Staff advances 7 440 6 –

Dividend receivable from

- Subsidiaries – – – 57,864

- A fellow subsidiary 10,946 – 10,946 –

- Associated companies – 2,834 – –

Total 308,844 4,531,947 301,086 57,866

(i) As at 31 December 2016, certain subsidiaries of the Disposal Group factored trade receivables and construction contracts

due from customers with carrying amounts of $1,353,956,000 to banks in exchange for cash. The transactions had been

accounted for as collateralised borrowings (Note 27) as the banks have full recourse to those subsidiaries in the event of

default by the debtors.

(ii) Other receivables due from fellow subsidiaries and associated companies are unsecured, interest-free and are repayable on

demand.





14. Inventories

The Group2017 2016

$’000 $’000

Raw materials 199 186,894

Work-in-progress – 648,674

Finished goods – 14

199 835,582

The cost of inventories recognised as an expense and included in “discontinued operations” amounted

to $1,290,814,000 (2016: $2,361,463,000). This includes inventories write-down of $46,198,000 (2016:

$283,379,000).

15. Construction contract work-in-progress

The Group2017 2016

$’000 $’000

Beginning of fi nancial year 72,408 199,122

Contract costs incurred during the fi nancial year 1,117,515 1,889,578

Contract expenses recognised in profi t or loss (1,031,363) (2,007,804)

Currency translation differences (337) (8,488)

Disposal of subsidiaries (Note 12) (158,223) –

End of fi nancial year – 72,408

Aggregate costs incurred and profi ts recognised (less losses recognised)

to date on uncompleted construction contracts 4,424,809 5,507,510

Less: Progress billings (1,513,134) (1,364,712)

Currency translation differences 19,818 (9,501)

Disposal of subsidiaries (2,931,493) –

– 4,133,297

Presented as:

Due from customers on construction contracts (Note 13) – 4,230,131

Due to customers on construction contracts (Note 26) – (96,834)

– 4,133,297

Advances received on construction contracts (Note 26) – 106,346




16. Other current assets


$’000 $’000 $’000 $’000

Deposits 108 1,703 19 –

Prepayments 484 10,188 446 100

592 11,891 465 100

17. Trade and other receivables - non-current

The Group2017 2016

$’000 $’000

Trade receivables from non-related parties (i) – 283,742

Less: Current portion – (181,186)

– 102,556

(i) As at 31 December 2016, breakdown of non-current trade and other receivables relating to the

Disposal Group were as follows:

Trade receivables amounting to $37,214,000 were unsecured, bearing interest at 4.35% per

annum with monthly instalment payments commencing in 2016 and would be repayable in

full by 2019. The balance of $31,948,000 due after 31 December 2017 had been presented

within non-current trade receivables.

Trade receivables amounting to $246,528,000 were secured, bearing interest at 5% per

annum with a partial lump sum payment of $175,920,000 in 2017 and quarterly instalment

payments commencing in 2018 and would be repayable in full by 2019. The balance of

$70,608,000 due after 31 December 2017 had been presented within non-current trade

receivables. The trade receivables were secured by 2 jack up rigs from the debtors as

collateral. The collateral was secured under fi rst and second preferred mortgage issued by the

debtors to a subsidiary of the Disposal Group (Note 34(b)).

As at 31 December 2016, the fair values of the non-current trade receivables approximated its carrying

amounts, determined from cash fl ow analyses discounted at market borrowing rates of 2.96% per

annum which the directors expected to be available to the Group.

18. Available-for-sale fi nancial assets

The Group2017 2016

$’000 $’000


Currency translation differences (58) (215)

Fair value gain/(loss) recognised in other comprehensive income

(Note 31(b)(iv)) 61 (76)







18. Available-for-sale fi nancial assets (continued)

At the balance sheet date, available-for-sale fi nancial assets include the following:

The Group2017 2016

$’000 $’000

Quoted equity shares in a corporation, at fair value – 657

Unquoted equity shares in corporations, at cost

- A fellow subsidiary – 2,912

- A non-related party – 1,030

– 3,942

– 4,599

As at 31 December 2016, the directors had assessed that the range of reasonable fair value

measurements was signifi cant and the probabilities of the various estimates could not be reasonably

assessed. Therefore, the unquoted equity shares had been measured at cost.

19. Club memberships


$’000 $’000 $’000 $’000

Transferable club memberships, at cost 363 531 245 273

Currency translation differences (5) 3 – –

Allowance for impairment in value of

club memberships (211) (254) (211) (225)

147 280 34 48




20. Investments in associated companies

The Group2017 2016

$’000 $’000



Share of loss after tax (284) (250)

Dividends received, net of tax – (207)



The Group had interests in a number of individually immaterial associates held through the Disposal

Group. The following table summarises, in aggregate, the carrying amount and share of loss and other

comprehensive loss of these associates that are accounted for using the equity method:

2017 2016$’000 $’000

Carrying amount of interests in immaterial associates – 4,185

Group’s share of:

- Loss from discontinuing operations (284) (250)- Other comprehensive loss (56) (212)- Total comprehensive loss (340) (462)

The associated companies as listed below had share capital consisting solely of ordinary shares, which

were held directly by the Group. The country of incorporation was also their principal place of business.

There were no contingent liabilities relating to the Group’s interests in the associated companies.

Name of associated companies Principal activities

Country ofincorporation/

business

% of paid-upcapital held bysubsidiaries of the Company 2017

%2016

%

DMI (Guangzhou) Ltd (i) and (ii) Overhaul and spare-parts

replacement and repair

People’s Republic

of China (“PRC”)

– 30

Tru-Marine Cosco (Tianjin)

Engineering Co., Ltd. (i) and (ii)

Overhaul and spare-parts


PRC – 40

Diesel Marine International

(Nantong) Co., Ltd. (i) and (ii)

Overhaul and spare-parts


PRC – 30

Diesel Marine Dalian Ltd (i) and (ii) Overhaul and spare-parts


PRC – 30

(i) Audited by Ruihua Certifi ed Public Accountants, PRC.

(ii) Disposed during the year due to disposal of the subsidiaries set out in Note 10.





21. Investments in subsidiaries

The Company2017 2016

$’000 $’000

Unquoted equity shares


Disposal of investment in subsidiaries (246,139) –

142,607 388,746

Accumulated impairment losses (15,968) (15,968)

End of fi nancial year 126,639 372,778

Movement in accumulated impairment losses are as follows:

2017 2016

$’000 $’000


Reversal of impairment charge – (480)


As at 31 December 2016, there had been a favourable change in estimates used to determine

the recoverable amount of a previously loss-making subsidiary since the last impairment loss was

recognised. Therefore, the Group recognised a reversal of the impairment during the fi nancial year ended

31 December 2016.

The Group had the following subsidiaries as at 31 December 2017 and 2016:

Name Principal activities


businessCost of

investment

Proportionof ordinary

shares directlyheld by the Company

Effectiveshareholding held by the Company

Effectiveshareholdingheld by non-controllinginterests

2017 2016 2017 2016 2017 2016 2017 2016

$’000 $’000 % % % % % %

COSCO (Singapore) Pte Ltd (i)

Ship owning, ship chartering and investment holding

Singapore 87,664 87,664 100 100 100 100 – –

COSCO Marine Engineering (Singapore) Pte Ltd (i)

Ship repairing, marine engineering, container repairs and services, fabrication works services and production of marine outfi tting components

Singapore 2,242 2,242 90 90 90 90 10 10

Harington Property Pte Ltd (i)

Trading and investing in properties, provide property management services and investment holding

Singapore 52,701 52,701 100 100 100 100 – –




21. Investments in subsidiaries (continued)



businessCost of

investment





2017 2016 2017 2016 2017 2016 2017 2016

$’000 $’000 % % % % % %

COSCO Shipyard Group Co., Ltd.(iii), (iv) and (vi)

Investment holding, ship repair and marine engineering

People’s Republic of

China (“PRC”)

– 191,173 – 51 – 51 – 49

COSCO (Nantong) Shipyard Co., Ltd.(iii), (iv) and (vi)

Ship repair and marine engineering

PRC – 24,670 – 50 – 75 – 25

COSCO (Dalian) Shipyard Co., Ltd.(iii), (iv) and (vi)

Ship repair, ship building and marine engineering

PRC – 30,296 – 39 – 69 – 31

COSCO (Guangdong) Shipyard Co., Ltd. (iii), (iv), (vi) and (vii)


PRC – – – – – 38 – 62

COSCO (Zhoushan) Shipyard Co., Ltd. (iii), (iv) and (vi)


PRC – – – – – 51 – 49

COSCO (Shanghai) Shipyard Co., Ltd.(iii), (iv), (vi) and (vii)

Ship repair and marine engineering

PRC – – – – – 48 – 52

COSCO (Qidong) Offshore Co., Ltd. (iii), (iv), (vi) and (vii)

Marine engineering PRC – – – – – 31 – 69

COSCO ShipyardEngineering Service (Dalian) Co., Ltd.(formerly known as COSCO Dalian Rikky Ocean Engineering Co., Ltd.) (iii), (vi) and (vii)

Overhaul, repair, commissioning and spare-parts replacement of governor, turbocharger and engine fuel system

PRC – – – – – 44 – 56

COSCO (Nantong) Clavon Ship Engineering Co., Ltd. (iii), (vi) and (vii)

Ship repair and corrosion control

PRC – – – – – 31 – 69








businessCost of

investment





2017 2016 2017 2016 2017 2016 2017 2016

$’000 $’000 % % % % % %

Zhongxing Sea-Land Engineering Co., Ltd. (iii), (vi) and (vii)

Ship repair PRC – – – – – 26 – 74

COSCO Shipyard Total Automation Co., Ltd. (iii) and (vi)

Design, manufacture, sale and technical service relating to vessels and industrial instruments

PRC – – – – – 51 – 49

COSCO (Hongkong) Shipyard Co., Ltd.(iii) and (vi)

Provision of shipyard fi nancing, marketing and sales of shipbuilding and offshore projects

Hong Kong – – – – – 51 – 49

Dalian Developer Driling Co., Limited (iii) and (vi)

Leasing, management and sales of offshore projects

Hong Kong – – – – – 69 – 31

Cos Fair ShippingPte Ltd (i) and (v)

Ship owning and ship chartering

Singapore/Worldwide

– – – – – 100 – –

Cos Glory Shipping Inc. (i) and (v)

Ship owning and shipchartering

Panama/Worldwide

– – – – – 100 – –

Hanbo Shipping Limited (ii) and (ix)


Hong Kong/Worldwide

– – – – 100 100 – –

Sanbo ShippingLimited (ii) and (x)


Hong Kong/Worldwide

– – – – 100 100 – –

Cos Orchid Shipping Pte Ltd (i) and (v)


Singapore/Worldwide

– – – – – 100 – –

Cos Prosperity Shipping Pte Ltd (i) and (v)


Singapore/Worldwide

– – – – – 100 – –

Cos Knight Shipping Maritime Inc. (i) and (v)


Panama/Worldwide

– – – – – 100 – –







businessCost of

investment





2017 2016 2017 2016 2017 2016 2017 2016

$’000 $’000 % % % % % %

Cos Lucky Shipping Maritime Inc. (i) and (v)


Panama/Worldwide

– – – – – 100 – –

COSCO Engineering Pte Ltd (i) and (viii)

Ship repairing, marine engineering, container repairs and services, fabrication works services and production of marine outfi tting components

Singapore – – – – 90 90 10 10

142,607 388,746

(i) Audited by PricewaterhouseCoopers LLP, Singapore.

(ii) Audited by PricewaterhouseCoopers fi rms outside Singapore.

(iii) Audited by Ruihua Certifi ed Public Accountants, PRC.

(iv) Audited by PricewaterhouseCoopers LLP, Singapore and fi rms outside Singapore up to date of disposal for the purpose of

preparation of consolidated fi nancial statements of the Group.

(v) Dissolved during the year.

(vi) Disposed during the year as detailed in Note 10.

(vii) As at 31 December 2016, these entities were controlled by the Company’s direct subsidiary, COSCO Shipyard Group

Co., Ltd. (“CSG”). Even though the effective shareholding held by the Company in these entities was less than 50%, these

entities were considered indirectly controlled by the Company through the Company’s controlling interest in CSG.

(viii) This entity is controlled by the Company’s direct subsidiary, COSCO Marine Engineering (Singapore) Pte Ltd.

(ix) This entity was deregistered in January 2018.

(x) This entity is in the process of deregistration.

Signifi cant restrictions

Cash and short-term deposits of $Nil (2016: $1,403,338,000) are held in the PRC and are subject to

local exchange control regulations. These local exchange control regulations provide for restrictions on

repatriating capital from the country, other than through normal dividends.

Carrying value of non-controlling interests

2017 2016

$’000 $’000

COSCO Shipyard Group Co., Ltd. and its subsidiaries – (16,875)

Other subsidiaries with immaterial non-controlling interests 1,421 1,329

1,421 (15,546)






Summarised fi nancial information of subsidiaries with material non-controlling interests

Set out below were the summarised fi nancial information for the Disposal Group, presented before inter-

company eliminations and exclude direct interest held by the Company in COSCO (Dalian) Shipyard Co.,

Ltd. and COSCO (Nantong) Shipyard Co., Ltd. as at 31 December 2016.

During the fi nancial year ended 31 December 2017, the Disposal Group was disposed as detailed in

Note 10. The summarised balance sheets and cash fl ows of the Disposal Group are disclosed in Note

12 and the summarised income statement of the Disposal Group is disclosed in Note 10.

Summarised balance sheet

2016

$’000

Current Assets 6,844,434

Liabilities (6,466,459)

Total current net assets 377,975

Non-currentAssets 2,688,747

Liabilities (3,018,457)

Total non-current net liabilities (329,710)

Net assets 48,265

Summarised income statement

2016

$’000

Revenue 2,517,968

Loss before income tax (852,914)

Income tax expense (97,797)

Total loss (950,711)

Other comprehensive loss (43,094)

Total comprehensive loss (993,805)

Dividends declared to non-controlling interests (1,494)





Summarised fi nancial information of subsidiaries with material non-controlling interests (continued)

Summarised cash fl ows

2016

$’000

Net cash used in operating activities (428,114)

Net cash used in investing activities (2,820)

Net cash provided by fi nancing activities 422,907

Net decrease in cash and cash equivalents (8,027)

Cash and cash equivalents at beginning of year 1,444,320

Effects of currency translation on cash and cash equivalents (34,932)

Cash and cash equivalents at end of year 1,401,361

During the fi nancial year ended 31 December 2016, the Group acquired additional interests in a

subsidiary for a purchase consideration of $1,388,000. The carrying amount of non-controlling interests

in these subsidiaries on the dates of acquisition was $1,541,000. The Group derecognised non-

controlling interests of $1,541,000 and recognised an increase in equity attributable to equity holders of

the Company of $153,000.

Effects of transactions with non-controlling interests on the equity attributable to equity holders of the

Company for the fi nancial year ended 31 December 2016 was summarised as follows:

2016

$’000

Changes in equity attributable to shareholders of the Company arising from:

- Acquisition of additional interests in subsidiaries 153





22. Investment properties

The Group2017 2016

$’000 $’000

Cost



Additions 148 –

Reclassifi cation from property, plant and equipment (Note 23) 4,798 7,432



Accumulated depreciation



Depreciation charge

- Continuing operations (Note 5) 432 284

- Discontinued operations 140 141

Reclassifi cation from property, plant and equipment (Note 23) 1,777 2,771



Net book value 13,786 14,675

Fair values 31,330 29,011

Investment properties comprise mainly offi ce units leased to fellow subsidiaries, associated companies and non-related parties under operating leases.

Investment properties are stated at cost less accumulated depreciation as the Group has elected to adopt the cost model method to measure its investment properties.

Valuation techniques used to derive Level 2 fair values

Level 2 fair values of the investment properties have been derived using the sales comparison approach. Sale prices of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most signifi cant input into this valuation approach is selling price per square metre.

Valuation process of the Group

The Group engages external, independent and qualifi ed valuers to determine the fair values of the investment properties at the end of each fi nancial year based on the properties’ highest and best use. As at 31 December 2017 and 2016, the fair values of the properties have been determined by CBRE Private Limited.

The following amounts are recognised in profi t or loss:

The Group2017 2016

$’000 $’000

(restated)

Rental income 652 929

Direct operating expenses arising from investment properties that

generate rental income 781 587




23. Property, plant and equipment

The Group

Leaseholdland andbuildings

$’000

Offi cerenovations,

furniture,fi xtures andequipment

$’000

Plant,machinery

andequipment

$’000

Motorvehicles

$’000

Motorvessels$’000

Docksand

quays$’000

Construction- in-progress

$’000Total$’000

2017Cost

Beginning of fi nancial year 1,239,164 57,687 1,022,417 44,101 754,776 1,036,617 9,720 4,164,482

Currency translation differences (15,895) (729) (13,032) (570) (43,242) (13,219) (116) (86,803)

Disposal of subsidiaries (Note 12) (1,202,580) (55,474) (1,002,833) (40,396) (448,739) (1,022,361) (10,962) (3,783,345)

Additions – 473 964 462 – – 7,332 9,231

Disposals (7,753) (1,369) (9,291) (2,697) (181,871) (72) – (203,053)

Reclassifi cation to investment properties(Note 22) (4,798) – – – – – – (4,798)

Reclassifi cation 1,848 421 4,057 613 – (965) (5,974) –

End of fi nancial year 9,986 1,009 2,282 1,513 80,924 – – 95,714

Accumulated depreciation and impairment losses

Beginning of fi nancial year 312,935 50,847 683,535 39,498 195,954 354,350 – 1,637,119

Currency translation differences (3,844) (634) (8,393) (508) (10,079) (4,387) – (27,845)

Disposal of subsidiaries (Note 12) (321,853) (50,100) (716,158) (36,973) (22,245) (368,791) – (1,516,120)

Depreciation charge

- Continuing operations (Note 5) 394 55 88 174 4,284 – – 4,995

- Discontinued operations 26,059 2,127 51,363 1,084 15,238 18,900 – 114,771

Disposals (4,945) (1,369) (8,260) (2,489) (138,932) (72) – (156,067)

Reclassifi cation to investment properties (Note 22) (1,777) – – – – – – (1,777)

End of fi nancial year 6,969 926 2,175 786 44,220 – – 55,076

Net book value End of fi nancial year 3,017 83 107 727 36,704 – – 40,638





23. Property, plant and equipment (continued)

The Group (continued)

Leaseholdland andbuildings

$’000

Offi cerenovations,

furniture,fi xtures andequipment

$’000

Plant,machinery

andequipment

$’000

Motorvehicles

$’000

Motorvessels$’000

Docksand

quays$’000

Construction- in-progress

$’000Total$’000

2016Cost

Beginning of fi nancial year 1,278,071 59,205 1,060,020 47,800 336,358 1,084,515 30,534 3,896,503

Currency translation differences (55,273) (2,565) (46,548) (1,983) 2,482 (47,705) (1,296) (152,888)

Additions (48) 762 2,026 748 2,218 27 20,337 26,070

Disposals (541) (872) (6,902) (2,764) (40,249) (39) (371) (51,738)


Reclassifi cation from inventories – – – – 453,967 – – 453,967

Reclassifi cation 24,387 1,157 13,821 300 – (181) (39,484) –

End of fi nancial year 1,239,164 57,687 1,022,417 44,101 754,776 1,036,617 9,720 4,164,482

Accumulated depreciation and impairment losses

Beginning of fi nancial year 294,942 50,904 651,955 42,321 208,041 341,017 – 1,589,180

Currency translation differences (12,565) (2,207) (28,730) (1,801) 3,145 (15,065) – (57,223)

Depreciation charge

- Continuing operations (Note 5) 540 57 141 248 11,288 – – 12,274

- Discontinued operations 32,860 2,978 67,582 1,494 2,369 23,612 – 130,895

Impairment charge

- Continuing operations (Note 5) – – – – 6,608 – – 6,608

- Discontinued operations – – – – – 4,405 – 4,405

Disposals (196) (871) (6,887) (2,764) (35,497) (34) – (46,249)


Reclassifi cation 125 (14) (526) – – 415 – –

End of fi nancial year 312,935 50,847 683,535 39,498 195,954 354,350 – 1,637,119

Net book value End of fi nancial year 926,229 6,840 338,882 4,603 558,822 682,267 9,720 2,527,363




23. Property, plant and equipment (continued)

The Group (continued)

As at 31 December 2016, the following arose from the Disposal Group:

Borrowing costs of $7,000 which arose due to fi nancing for the construction of docks and quays were capitalised at an effective interest rate of 4.48%.

Certain subsidiaries of the Group had secured certain property, plant and equipment with carrying amounts of $277,308,000 to fi nancing institutions in exchange for cash. The transactions had been accounted for as collateralised borrowings as the banks had full recourse to the subsidiaries in the event of default (Note 27).

An inventory amounting to $453,967,000 was reclassifi ed to property, plant and equipment at its net realisable value.

The Company

Offi ce renovations,

furniture, fi xtures

and equipmentMotor

vehicles Total$’000 $’000 $’000

2017Cost

Beginning of fi nancial year 533 1,122 1,655

Additions 3 – 3

Disposals – (607) (607)

End of fi nancial year 536 515 1,051


Beginning of fi nancial year 514 748 1,262

Depreciation charge 11 81 92

Disposals – (485) (485)

End of fi nancial year 525 344 869

Net book valueEnd of fi nancial year 11 171 182

2016Cost

Beginning of fi nancial year 528 1,122 1,650

Additions 5 – 5

End of fi nancial year 533 1,122 1,655


Beginning of fi nancial year 500 620 1,120

Depreciation charge 14 128 142

End of fi nancial year 514 748 1,262

Net book valueEnd of fi nancial year 19 374 393





24. Intangible assets

The Group2017 2016

$’000 $’000

Goodwill arising on consolidation – 9,536

Cost





Net book value – 9,536

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (“CGU”), identifi ed as the subsidiaries in the

PRC (the Disposal Group) according to country of operation and business segments. The business

segment refers to ship repair, ship building and marine engineering.

During the fi nancial year ended 31 December 2016, the recoverable amount of a CGU was determined

based on value-in-use. Cash fl ow projections used in the value-in-use calculations were based on

fi nancial forecasts approved by management covering a fi ve-year period. Cash fl ows beyond the fi ve-

year period were extrapolated based on nil growth rate. The growth rate did not exceed the long-term

average growth rate for ship repair, ship building and marine engineering business in the PRC in which

the CGU operates.

Key assumptions used for value-in-use calculations:

2016

Growth rate1 nil

Discount rate2 11%

1 Weighted average growth rate used to extrapolate cash fl ows beyond the budget period

2 Pre-tax discount rate applied to the pre-tax cash fl ow projections

These assumptions were used for the analysis of the CGU within the business segment. Management

determined budgeted gross margin based on past performance and its expectations of the market

developments. The weighted average growth rate used was consistent with the forecasts included in

industry reports. The discount rate used was pre-tax and refl ected specifi c risks relating to the relevant

segments.

The impairment test had revealed that the recoverable amount of the CGU was higher than its carrying

amount. Hence, there was no impairment charge recognised for the fi nancial year ended 31 December

2016.

In addition, a decrease in the growth rate or an increase in the discount rate by 1% per annum would

not result in any impairment charge for the fi nancial year ended 31 December 2016.




25. Deferred expenditure

Deferred expenditure relates to prepaid rental for leasehold land on operating leases and is amortised on

a straight-line basis over the lease period.

26. Trade and other payables


$’000 $’000 $’000 $’000

Trade payables:

- Non-related parties 771 436,022 – –

- Associated companies – 2,181 – –

- Fellow subsidiaries 943 6,244 – –

1,714 444,447 – –

Construction contracts:

Advances received (Note 15):

- Non-related parties – 101,653 – –

- Fellow subsidiaries – 4,693 – –

– 106,346 – –

Due to customers (Note 15):

- Non-related parties – 96,834 – –

– 203,180 – –

Advances from non-related parties 536 16,214 – –

Non-trade payables:

- Subsidiaries – – 47,380 15,040

- Fellow subsidiaries 38,039 – 38,000 –

38,039 – 85,380 15,040

Deposits received 302 13,284 – –

Deferred income – 5,425 – –

Other accruals for operating expenses 6,179 1,396,442 3,745 2,545

Dividend payable to non-controlling

interests of subsidiaries – 16,714 – –

Total 46,770 2,095,706 89,125 17,585

The non-trade payables to subsidiaries and fellow subsidiaries are unsecured, interest-free and are

repayable on demand.





27. Borrowings

The Group2017 2016

$’000 $’000

Current

Bank borrowings (unsecured) – 2,386,046

Bank borrowings (secured) – 1,639,115

Loan from a fellow subsidiary (unsecured) – 188,796

Bills payable – 83,134

– 4,297,091

Non-current

Bank borrowings (unsecured) – 2,912,394

Loan from a fellow subsidiary (unsecured) – 105,933

– 3,018,327

Total borrowings – 7,315,418

The exposure of the borrowings of the Group to interest rate changes and the contractual repricing

dates at the balance sheet dates were as follows:

The Group2017 2016

$’000 $’000

Less than 1 year – 4,297,091

1 – 5 years – 3,018,327

– 7,315,418

(a) Security granted

As at 31 December 2016, total borrowings included secured liabilities of $1,639,115,000 for the

Group. Bank borrowings of the Group were secured over certain trade receivables (Note 13),

construction contracts due from customers (Note 15) and property, plant and equipment (Note

23) of the Disposal Group.

(b) Loan from a fellow subsidiary

As at 31 December 2016, the loans from a fellow subsidiary of $294,729,000 were unsecured,

interest-bearing at an average interest rate of 3.44%. $188,796,000 of the total loan was due in

2016 and the remaining amount of $105,933,000 was due by 2021.




27. Borrowings (continued)

(c) Fair values of non-current borrowings

As at 31 December 2016, the carrying amounts of non-current borrowings approximated their fair

values.

The fair values were determined from cash fl ow analyses, discounted at the market borrowing

rates which the directors expect to be available to the Group as follows:

2016

USD RMB EUR

Bank borrowings 2.96% 2.87% 2.18%

Loan from a fellow subsidiary 2.82% 4.52% –

The fair values are within Level 2 of the fair value hierarchy.

(d) Breach of loan covenants

As at 31 December 2016, certain subsidiaries of the Disposal Group had loan agreements that

were subjected to covenant clauses, where certain key fi nancial ratios need to be met. Some

of the loan covenant clauses had been breached and the banks were contractually entitled to

request for repayment of the outstanding loan amounting to $1,488,354,000. The outstanding

balance was presented as a current liability as at 31 December 2016.

28. Provisions

The Group2017 2016

$’000 $’000

Provision for off hire claim (Note (a)) – 443

Provision for warranties (Note (b)) – 38,506

– 38,949

(a) Movements in provision for off hire claim on hire income are as follows:

The Group2017 2016

$’000 $’000

Beginning of fi nancial year 443 1,584

(Reversal)/provision made during the fi nancial year (77) 245

Provision utilised during the fi nancial year (332) (1,432)

Currency translation differences (34) 46

End of fi nancial year – 443

Provision for off hire claim on charter hire income was in respect of refund to be made to

customers for the period in which the motor vessels were not available for use.





28. Provisions (continued)

(b) Movements in provision for warranties are as follows:

The Group2017 2016

$’000 $’000


Provision/(reversal) recognised during the fi nancial year 82,323 (8,259)

Provision utilised during the fi nancial year (4,825) (5,768)

Currency translation differences 36 (2,383)



The Group provided one to two-year warranties on certain ship building and marine engineering

contracts in respect of the Disposal Group and undertakes to repair or rectify defects that fail to

perform satisfactorily. A provision was recognised at the balance sheet date for expected warranty

claims based on an estimate by technical engineers and past experience of the possible repairs

and rectifi cations.

29. Deferred income taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset

current income tax assets against current income tax liabilities and when the deferred income taxes

relate to the same fi scal authority. The amounts, determined after appropriate offsetting, are shown on

the balance sheets as follows:

The Group2017 2016

$’000 $’000

Deferred income tax assets:- To be recovered within one year – 71,410

- To be recovered after one year – 69,188

– 140,598

Deferred income tax liabilities:- To be settled after one year 132 263




29. Deferred income taxes (continued)

Movement in the deferred income tax account is as follows:


$’000 $’000 $’000 $’000

Beginning of fi nancial year (140,335) (236,644) – –

Currency translation differences 2,143 10,219 – –

Disposal of subsidiaries (Note 12) 86,780 – – –

Deferred tax charged to profi t or loss,

attributable to:

- continuing operations (1) – – –

- discontinued operations 51,530 86,109 – –

Deferred tax charged/(credited) to other

comprehensive income (Note 31(b)(iv)) 15 (19) – –

End of fi nancial year 132 (140,335) – –

Deferred income tax assets are recognised for tax losses, provisions and accruals carried forward

to the extent that realisation of the related tax benefi ts through future taxable profi ts is probable. The

Group has unrecognised tax losses of $Nil (2016: $481,887,000) at the balance sheet date which

can be carried forward and used to offset against future taxable income subject to meeting certain

statutory requirements by those companies with unrecognised tax losses in their respective countries of

incorporation.

The movements in the deferred income tax assets and liabilities (prior to offsetting of balances within the

same tax jurisdiction) during the fi nancial year is as follows:

Deferred income tax liabilities

Accelerated tax

depreciationFair value gain - net Total

$’000 $’000 $’000

2017Beginning of fi nancial year 133 137 270

Currency translation differences – (4) (4)

Disposal of subsidiaries (Note 12) – (148) (148)

Credited to profi t or loss for continuing operations

(Note 9) (1) – (1)

Charged to other comprehensive income – 15 15

End of fi nancial year 132 – 132






Deferred income tax liabilities (continued)

Accelerated tax

depreciationFair value gain - net Total

$’000 $’000 $’000

2016Beginning of fi nancial year 133 161 294

Currency translation differences – (5) (5)

Credited to other comprehensive income – (19) (19)

End of fi nancial year 133 137 270

Reconciliation of total deferred income tax liabilities after appropriate offsetting from the same tax

jurisdiction is as follows:

The Group2017 2016

$’000 $’000

Total deferred income tax liabilities 132 270

Offsetting of deferred income tax assets from the same tax jurisdiction – (7)

Total deferred income tax liabilities after appropriate offsetting from

the same tax jurisdiction 132 263

Deferred income tax assets

Provisions and accruals Tax losses Total

$’000 $’000 $’000

2017Beginning of fi nancial year (134,873) (5,732) (140,605)

Currency translation differences 2,086 61 2,147

Disposal of subsidiaries (Note 12) 79,277 7,651 86,928

Charged/(credited) to profi t or loss for discontinued

operations (Note 9) 53,510 (1,980) 51,530

End of fi nancial year – – –

2016Beginning of fi nancial year (184,140) (52,798) (236,938)

Currency translation differences 8,003 2,221 10,224

Charged to profi t or loss for discontinued operations

(Note 9) 41,264 44,845 86,109

End of fi nancial year (134,873) (5,732) (140,605)





Deferred income tax assets (continued)

Reconciliation of total deferred income tax assets after appropriate offsetting from the same tax

jurisdiction is as follows:

The Group2017 2016

$’000 $’000

Total deferred income tax assets – (140,605)

Offsetting of deferred income tax liabilities from the same tax jurisdiction – 7

Total deferred income tax assets after appropriate offsetting from

the same tax jurisdiction – (140,598)

30. Share capital

Issued share capitalNo. of

ordinary shares Amount

’000 $’000

2017Beginning and end of fi nancial year 2,239,245 270,608

2016Beginning and end of fi nancial year 2,239,245 270,608

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

Fully paid ordinary shares carry one vote per share and carry a right to dividends as and when declared

by the Company.





30. Share capital (continued)

Share options

The COSCO Group Employees’ Share Option Scheme 2002 (the “Scheme 2002”) was approved by

members of the Company at an Extraordinary General Meeting on 8 May 2002.

Under the Scheme 2002, share options to subscribe for the ordinary shares of the Company are granted

to directors, key management personnel and employees. The exercise price of the granted options is

determined at the average of the closing prices of the Company’s ordinary shares as quoted on the

Singapore Exchange for the fi ve market days immediately preceding the date of the grant. The options

may be exercised in full or in part in respect of 1,000 shares or a multiple thereof, on the payment of

the exercise price. The persons to whom the options have been issued have no right to participate by

virtue of the options in any share issue of any other company. The Group has no legal or constructive

obligation to repurchase or settle the options in cash.

The aggregate number of shares over which options may be granted on any date, when added to the

number of shares issued and issuable in respect of all options granted under the Scheme, shall not

exceed 15% of the issued shares of the Company on the day preceding that date.


or associated company, or the holding corporation for at least one year on or prior to the date of the

grant, may be exercised twelve months after the date of grant but before the end of one hundred and

twenty months. For employees and directors who are in the service of the associated company and

non-executive directors, the options shall expire at the end of sixty months. Options issued at a discount

to market price, may only be exercised two years after the date of the grant.


or associated company, or the holding corporation for at least six months but less than one year on or

prior to the date of grant, may be exercised twenty-four months after the date of the grant but before

the end of one hundred and twenty months. For employees and directors who are in the service of the

associated company and non-executive directors, the options shall expire at the end of sixty months.

Options issued at a discount to market price, may only be exercised three years after the date of the

grant.

Particulars of the options granted pursuant to the Scheme 2002 in 2006, 2007 and 2008 known as

“2006 Options”, “2007 Options” and “2008 Options” respectively were set out in the Directors’

Report for the fi nancial years ended 31 December 2006, 31 December 2007 and 31 December 2008

respectively.




30. Share capital (continued)

Share options (continued)

Movements in the number of unissued ordinary shares under option at the end of the fi nancial year and

their exercise prices are as follows:

The Group and the Company

Financial year ended 31 December 2017

Number of ordinary shares under option outstanding


Beginning of fi nancial

year

Lapsed during

fi nancialyear

End offi nancial

year’000 ’000 ’000 $

2007 Options 2,800 (2,800) – 2.48 5.2.2008 - 4.2.2017

2008 Options 6,750 (6,030) 720 2.95 24.3.2009 - 23.3.2018

9,550 (8,830) 720

Financial year ended 31 December 2016

Number of ordinary shares under option outstanding


Beginning of fi nancial

year

Lapsed during

fi nancialyear

End offi nancial

year’000 ’000 ’000 $

2006 Options 550 (550) – 1.23 21.2.2007 - 20.2.2016

2007 Options 3,050 (250) 2,800 2.48 5.2.2008 - 4.2.2017

2008 Options 7,180 (430) 6,750 2.95 24.3.2009 - 23.3.2018

10,780 (1,230) 9,550

As at 31 December 2017 and 2016, all outstanding options are exercisable. There was no share option

issued in 2017 and 2016. There were also no shares of the Company allotted and issued by virtue of the

exercise of options to take up unissued shares of the Company in 2017 and 2016.





31. Statutory and other reserves


$’000 $’000 $’000 $’000

(a) Composition:

Share option reserve 44,578 44,578 44,578 44,578

Statutory reserve – 245,679 – –

Currency translation reserve (63,605) 20,922 – –

Fair value reserve – 208 – –

Other reserve 69 472 527 527

(18,958) 311,859 45,105 45,105


$’000 $’000 $’000 $’000

(b) Movements:

(i) Share option reserve Beginning and end of fi nancial

year 44,578 44,578 44,578 44,578

The Group2017 2016

$’000 $’000

(ii) Statutory reserve Beginning of fi nancial year 245,679 243,185

Disposal of subsidiaries (245,812) –

Transfer from retained earnings 133 2,494


(iii) Currency translation reserve Beginning of fi nancial year 20,922 40,519

Reclassifi cation on disposal of subsidiaries (Note 12) (79,799) –

Net currency translation differences of fi nancial statements

of foreign subsidiaries and associated companies (2,327) (40,446)

Non-controlling interests (2,401) 20,849

End of fi nancial year (63,605) 20,922




31. Statutory and other reserves (continued)

The Group2017 2016

$’000 $’000

(b) Movements: (continued)

(iv) Fair value reserve Beginning of fi nancial year 208 237

Reclassifi cation on disposal of subsidiaries (Note 12) (232) –

Fair value gain/(loss) for available-for-sale fi nancial asset

(Note 18) 61 (76)

Deferred tax (charged)/credited to other comprehensive

income (Note 29) (15) 19

46 (57)

Non-controlling interests (22) 28

End of fi nancial year – 208

(v) Other reserve Beginning of fi nancial year 472 319

Disposal of subsidiaries (403) –

Changes in ownership interests in subsidiaries - acquisition

of additional interests in subsidiaries – 153

End of fi nancial year 69 472

Statutory reserve represented the amount set aside in compliance with the local laws in the PRC where

the subsidiaries of the Disposal Group reside.

Statutory and other reserves are non-distributable.

32. Dividends

No dividend will be recommended at the Annual General Meeting scheduled on 27 April 2018. No

dividend was declared for the fi nancial year ended 31 December 2016.

33. Commitments

(a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the fi nancial

statements are as follows:

The Group2017 2016

$’000 $’000

Property, plant and equipment – 11,503

Commitment for an acquisition (Note 38(i)) 488,070 –

Investment in an associated company (Note 38(ii)) 13,953 –

502,023 11,503





33. Commitments (continued)

(b) Operating lease commitments – where the Group is a lessee

As at 31 December 2016, the Group leased various offi ce premises, docks and quays from non-

related parties and related parties under non-cancellable operating lease agreements.

As at 31 December 2017, the Group leased various offi ce premises from non-related parties

under non-cancellable operating lease agreements.

The leases have varying terms, escalation clauses and renewal rights.

The future minimum lease payables under non-cancellable operating leases contracted for at the

balance sheet date but not recognised as liabilities, are as follows:

The Group2017 2016

$’000 $’000

Not later than 1 year 182 10,002

Later than 1 year but not later than 5 years 763 32,771

Later than 5 years 48 24,332

993 67,105

(c) Operating lease commitments – where the Group is a lessor

The Group leases out certain items of property, plant and equipment and investment properties to

non-related parties and related parties under non-cancellable operating leases.

The future minimum lease receivables under non-cancellable operating leases contracted for at

the balance sheet date but not recognised as receivables, are analysed as follows:

The Group2017 2016

$’000 $’000

Not later than 1 year 3,190 5,480

Later than 1 year but not later than 5 years 4,759 –

Later than 5 years 151 –

8,100 5,480




34. Financial risk management

Financial risk factors

The Group’s activities expose it to a variety of fi nancial risks: market risk (including currency risk, interest

rate risk and price risk), credit risk and liquidity risk.

Risk management is carried out under policies approved by the Board of Directors. The Board approves

guidelines for overall risk management, as well as policies covering these specifi c areas.

(a) Market risk

(i) Currency risk

Currency risk arises from transactions denominated in currencies other than the respective

functional currencies of the entities in the Group.

The Group monitors its foreign currency exchange risk closely and where appropriate,

enters into forward currency contracts to manage the currency exposure. The Group also

draw down USD denominated borrowings as a form of “economic hedge” over its USD

denominated fi nancial assets.

In addition, the Group has certain investments in foreign operations, whose net assets are

exposed to currency translation risk. In respect of the previous year ended 31 December

2016, currency exposure to the net assets of the Group’s foreign operations in the People’s

Republic of China was managed primarily through borrowings denominated in RMB and

USD.





34. Financial risk management (continued)

(a) Market risk (continued)

(i) Currency risk (continued)

The Group’s currency exposure based on the information provided to key management is

as follows:

SGD USD RMB Others* Total$’000 $’000 $’000 $’000 $’000

At 31 December 2017

Financial assetsCash and cash equivalents and

available-for-sale fi nancial assets 13,302 45,201 1 – 58,504

Restricted cash 140,660 – – – 140,660

Trade and other receivables,

excluding advances paid to

suppliers 6,602 1,156 301,086 – 308,844

Receivables from subsidiaries 22,000 25,380 – – 47,380

Other fi nancial assets 108 – – – 108

182,672 71,737 301,087 – 555,496

Financial liabilitiesPayables by subsidiaries 22,000 25,380 – – 47,380

Other fi nancial liabilities 43,753 2,481 – – 46,234

65,753 27,861 – – 93,614

Net fi nancial assets 116,919 43,876 301,087 – 461,882

Less: Net fi nancial assets

denominated in the

respective entities’

functional currencies (115,483) (36,742) – –

Currency exposure 1,436 7,134 301,087 –

* Others mainly include Euro, Norwegian Kronor and Japanese Yen.







The Group’s currency exposure based on the information provided to key management is

as follows (continued):

SGD USD RMB Others* Total$’000 $’000 $’000 $’000 $’000

At 31 December 2016

Financial assetsCash and cash equivalents and

available-for-sale fi nancial assets 22,012 437,701 1,050,918 14,343 1,524,974

Trade and other receivables,

excluding advances paid to

suppliers 8,059 4,072,713 294,217 8,722 4,383,711

Receivables from subsidiaries – 14,482 43,382 – 57,864

Other fi nancial assets 95 – 1,608 – 1,703

30,166 4,524,896 1,390,125 23,065 5,968,252

Financial liabilitiesBorrowings – 6,366,318 804,739 144,361 7,315,418

Payables by subsidiaries – 14,482 43,382 – 57,864

Other fi nancial liabilities 5,376 129,581 1,725,376 10,997 1,871,330

5,376 6,510,381 2,573,497 155,358 9,244,612

Net fi nancial assets/ (liabilities) 24,790 (1,985,485) (1,183,372) (132,293) (3,276,360)

Less: Net fi nancial (assets)/

liabilities denominated

in the respective entities’

functional currencies (23,199) (66,642) 1,183,374 –

Add: Firm commitments and

highly probable forecast

transactions in foreign

currencies – 2,209,478 – (23,474)

Currency exposure 1,591 157,351 2 (155,767)

* Others mainly include Euro, Norwegian Kronor and Japanese Yen.








The Company’s currency exposure based on the information provided to key management

is as follows:

2017 2016

SGD USD RMB Total SGD USD RMB Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash and cash equivalents 4,181 31,813 1 35,995 7,652 22,215 1 29,868

Restricted cash 140,660 – – 140,660 – – – –

Trade and other receivables – – 301,086 301,086 1 14,483 43,382 57,866

Other fi nancial assets 19 – – 19 – – – –

144,860 31,813 301,087 477,760 7,653 36,698 43,383 87,734

Financial liabilitiesOther fi nancial liabilities 63,745 25,380 – 89,125 17,545 – 40 17,585

Net fi nancial assets/ (liabilities) 81,115 6,433 301,087 388,635 (9,892) 36,698 43,343 70,149

Less: Net fi nancial (assets)/

liabilities denominated

in the entity’s functional

currency (81,115) – – 9,892 – –

Currency exposure – 6,433 301,087 – 36,698 43,343

If the USD changes against the SGD and RMB, and RMB changes against the SGD, by

100 basis points (2016: 500 basis points) with all other variables including tax rate being

held constant, the effects arising from the net fi nancial asset/liabilities that are exposed to

currency risk will be as follows:

Increase/(decrease) 2017 2016

Profi t after tax

Loss

after tax

$’000 $’000

The Group

USD against SGD

- Strengthened 35 (594)

- Weakened (35) 594

USD against RMB

- Strengthened – 11,562

- Weakened – (11,562)

RMB against SGD

- Strengthened 12,167 –

- Weakened (12,167) –







Increase/(decrease) Profi t

after taxProfi t

after tax

$’000 $’000

The Company

USD against SGD

- Strengthened 40 1,052

- Weakened (40) (1,052)

RMB against SGD

- Strengthened 12,167 8,649

- Weakened (12,167) (8,649)

(ii) Price risk

The Group is not exposed to any signifi cant equity securities price risk.

(iii) Cash fl ow and fair value interest rate risks

Cash fl ow interest rate risk is the risk that the future cash fl ows of a fi nancial instrument will

fl uctuate because of changes in market interest rates. Fair value interest rate risk is the risk

that the fair value of a fi nancial instrument will fl uctuate due to changes in market interest

rates. The Group has cash balances placed with reputable banks and fi nancial institutions

which generate interest income for the Group. The Group manages its interest rate risks by

placing such balances on varying maturities and interest rate terms.

As at 31 December 2017, the Group has no borrowings.

As at 31 December 2016, the Group’s interest rate risk mainly arose from borrowings at

variable rates related to the Disposal Group. The Group monitored the interest rates on

borrowings closely to ensure that the borrowings were maintained at favourable rates and

would use derivative fi nancial instruments to hedge their exposures when the exposure was

signifi cant.

As at 31 December 2016, the Group’s borrowings at variable rates on which effective

hedges had not been entered into, were denominated in USD. If the USD interest rates had

increased/decreased by 0.5% with all other variables including tax rate being held constant,

the loss after tax would had been higher/lower by $19,001,000 as a result of higher/lower

interest expense on these borrowings.






(b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting

in fi nancial loss to the Group.

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s

large number of customers who are internationally dispersed. Due to these factors, management

believes that no additional credit risk beyond the amount of allowance for impairment made is

inherent in the Group’s and Company’s trade receivables.

The Group has no signifi cant concentrations of credit risk with respect to trade receivables. The

Group has policies in place to ensure that sales of products and services are made to customers

with an appropriate credit history.

As at 31 December 2016, certain subsidiaries of the Group had obtained 4 vessels and 2 jack

up rigs valued at $463,180,000 from their debtors as collateral to secure outstanding trade

receivables of $254,058,000. The collateral was secured under fi rst and second preferred

mortgage issued by the debtors to these subsidiaries.

Other than the above-mentioned, the Group and Company do not hold any other collateral as at

31 December 2017 and 2016. The maximum exposure to credit risk for each class of fi nancial

instruments is the carrying amount of that class of fi nancial instruments presented on the balance

sheet.

The other receivables of the Group and of the Company comprise 1 debtor, (2016: Nil) which is a

fellow subsidiary, and it represents 99% of other receivables. This is in relation to the sale of the

Disposal Group as disclosed in Note 10.

The Group’s and Company’s major classes of fi nancial assets are bank deposits, trade receivables

(including amount due from customer on construction contracts) and other receivables (including

staff advances, amount due from fellow subsidiaries and dividend receivable from associated

companies).

The credit risk for trade and other receivables based on the information provided to key

management is as follows:

The Group2017 2016

$’000 $’000

By business segments

Ship repair, ship building and marine engineering 6,405 4,380,601

Shipping 1,157 3,103

Others* 301,282 7

308,844 4,383,711

*Included in others are consideration for the sale of the Disposal Group due from a fellow subsidiary amounting to

$290,046,000 as disclosed in Note 12 and dividend receivable from a fellow subsidiary amounting to $10,946,000 as

disclosed in Note 13.





(b) Credit risk (continued)

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks

with high credit-ratings assigned by international credit-rating agencies. Trade and other

receivables that are neither past due nor impaired are substantially companies with a good

collection track record with the Group and the Company.

(ii) Financial assets that are past due and/or impaired

There is no other class of fi nancial assets that is past due and/or impaired except for trade

and other receivables.

The age analysis of trade and other receivables past due but not impaired is as follows:

The Group2017 2016

$’000 $’000

Past due 0 to 3 months 2,373 2,670

Past due 3 to 6 months 66 105,720

Past due over 6 months 1,457 106,110

3,896 214,500

As at 31 December 2017, the Group has recognised allowance for impairment of trade and

other receivables amounting to $Nil (2016: $543,335,000).

The movement in the allowance for impairment in respect of these trade and other

receivables are as follows:

The Group2017 2016

$’000 $’000


Currency translation differences (7,780) (19,009)

(Reverse)/allowance made (93,536) 180,282

Allowance utilised (31,679) (42,905)

Disposal of subsidiaries (410,340) –


Further information relating to the allowance for impairment of trade and other receivables is

given in Note 13 to the fi nancial statements.






(c) Liquidity risk

The Group adopts prudent liquidity risk management by maintaining suffi cient cash and having

an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying

businesses, the Group aims at maintaining fl exibility in funding by keeping committed credit

facilities available.

The table below analyses the maturity profi le of the Group’s and Company’s fi nancial liabilities

based on contractual undiscounted cash fl ows.

Less than 1 year

Between1 and 5 years

Over5 years

$’000 $’000 $’000

The Group

At 31 December 2017Other fi nancial liabilities (46,234) – –

At 31 December 2016Other fi nancial liabilities (1,871,330) – –

Borrowings (4,466,748) (3,105,886) –

The Company



(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as

a going concern and to maintain an optimal capital structure so as to maximise shareholder value.

In order to maintain or achieve an optimal capital structure, the Group may adjust the amount

of dividend payment, return capital to shareholders, issue new shares, buy back issued shares,

obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on the return on shareholders’ fund. The return on

shareholders’ fund was 62.0% per annum for the current fi nancial year ended 31 December 2017

(2016: - 80.6% per annum).

The return on shareholders’ fund is calculated as net profi t/(loss) attributable to equity holders of

the Company divided by average shareholders’ equity.

Except as disclosed in Note 27 (d), the Group and the Company were in compliance with all

externally imposed capital requirements for the fi nancial year ended 31 December 2016.

The Group and Company are not exposed to any externally imposed capital requirements for the

fi nancial year ended 31 December 2017.





(e) Fair value measurements

The following table presents assets and liabilities measured and carried at fair value and classifi ed

by level of the following fair value measurement hierarchy:

(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(ii) inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

(iii) inputs for the asset or liability that are not based on observable market data (unobservable

inputs) (Level 3).

Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000

The Group

2016

Assets

Available-for-sale fi nancial assets

- Quoted equity shares 657 – – 657

Total assets 657 – – 657

There were no transfers between Levels 1 and 2 during fi nancial year ended 31 December 2016.

The available-for-sale fi nancial assets were disposed with the sale of Disposal Group during the

fi nancial year ended 31 December 2017.

The fair value of fi nancial instruments traded in active markets (such as trading and available-for-

sale securities) is based on quoted market prices at the balance sheet date. The quoted market

price used for fi nancial assets held by the Group is the current bid price. These instruments are

included in Level 1.

The carrying amount less impairment provision of trade receivables and payables are assumed

to approximate their fair values. The fair value of fi nancial liabilities for disclosure purposes is

estimated based on quoted market prices or dealer quotes for similar instruments by discounting

the future contractual cash fl ows at the current market interest rate that is available to the Group

for similar fi nancial instruments. The carrying amounts of current borrowings approximates their

fair values.

The carrying amount of the different categories of fi nancial instruments is as disclosed on the face

of the balance sheet and in Note 18 to the fi nancial statements, except for the following:


$’000 $’000 $’000 $’000

Loans and receivables 508,116 5,905,789 477,760 87,734

Financial liabilities at

amortised cost 46,234 9,186,748 89,125 17,585






(g) Offsetting fi nancial assets and fi nancial liabilities

The fi nancial assets and liabilities of the Group and the Company are not subject to enforceable

master netting arrangements or similar agreement. Financial assets and liabilities are settled on a

gross basis.

35. Immediate and ultimate holding corporation

The Company’s immediate holding corporation is China Ocean Shipping (Group) Company, incorporated

in the People’s Republic of China (“PRC”). The Company’s ultimate holding corporation is China COSCO

Shipping Corporation Limited, incorporated in PRC.

36. Related party transactions

(a) The Company is controlled by China COSCO Shipping Corporation Limited (“COSCO Shipping”),

the parent group and a state-owned enterprise established in the PRC.

COSCO Shipping itself is controlled by the PRC government, which also owns a signifi cant

portion of the productive assets in the PRC. In accordance with amendment to FRS 24, other

government-related entities and their subsidiaries (other than COSCO Shipping group companies),

directly or indirectly controlled, jointly-controlled or signifi cantly infl uenced by the PRC government

are also defi ned as related parties of the Group. On that basis, related parties include COSCO

Shipping and its subsidiaries, other government-related entities and their subsidiaries directly or

indirectly controlled, jointly controlled or signifi cantly infl uenced by the PRC government, other

entities and corporations in which the Company is able to control or exercise signifi cant infl uence

and key management personnel of the Company and COSCO Shipping as well as their close

family members. For the purpose of the related party transactions disclosures, the Group applies

the exemption on disclosure of related parties transactions as allowed under FRS 24.

The transactions conducted with government-related entities are based on terms agreed between

the parties.

In addition to the related party information and transactions disclosed elsewhere in the

consolidated financial statements, the following is a summary of significant related party

transactions entered into the ordinary course of business between the Group and its related

parties during the fi nancial year.




36. Related party transactions (continued)

(a) (continued)


The Group2017 2016

$’000 $’000

Revenue

Sales to fellow subsidiaries 2,630 2,654

Sales of property, plant and equipment to a fellow subsidiary 103 –

Rental income received/receivable from fellow subsidiaries 386 776

Rental income received/receivable from related parties 62 51

Time charter revenue received/receivable from

a fellow subsidiary 395 203

Service income received from fellow subsidiaries 772 12

Commission received/receivable from a fellow subsidiary 14 –

Expenditure

Purchases from fellow subsidiaries 2,690 7,324

Purchases from associated companies 19 16

Rental paid/payable to fellow subsidiaries 979 188

Crew wages paid/payable to fellow subsidiaries 4,429 8,715

Service expenses paid/payable to fellow subsidiaries 93 121

Insurance premium paid/payable to a fellow subsidiary 144 152

Commission paid/payable to fellow subsidiaries 119 12

The Group2017 2016

$’000 $’000

Commitments

Operating lease commitments with fellow subsidiaries

where the Group is a lessor – 36

Outstanding balances as at 31 December 2017, arising from sales or purchases of goods and

services and receivables/payables from/to fellow subsidiaries, are set out in Notes 13 and 26

respectively.






(a) (continued)

Discontinued operations

The Group2017 2016

$’000 $’000

Revenue

Sales to fellow subsidiaries 49,058 45,022

Sales to associated companies 43 84

Rental income received/receivable from fellow subsidiaries 1,203 275

Rental income received/receivable from associated companies 5 7

Service income received from ultimate holding corporation 842 943

Service income received from fellow subsidiaries 395 467

Interest received/receivable from a fellow subsidiary 1,186 2,497

Expenditure

Purchases from fellow subsidiaries 20,729 30,754

Purchases from associated companies 517 767

Rental paid/payable to fellow subsidiaries 19,951 229

Sub-contractor costs paid/payable to fellow subsidiaries 13,352 10,299

Sub-contractor costs paid/payable to associated companies 1,199 3,397

Service expenses paid/payable to fellow subsidiaries 10 96

Service expenses paid/payable to an associated company 5 834

Service expenses paid/payable to related parties – 92

Interest paid/payable to a fellow subsidiary 10,780 12,254

The Group2017 2016

$’000 $’000

Commitments

Operating lease commitments with an associated company

where the Group is a lessor – 5

(b) Share options granted to key management and non-executive directors

There were no share options granted to key management and non-executive directors of the

Group during 2017 and 2016. The share options granted previously were given on the same

terms and conditions as those offered to other employees of the Company (Note 30). There were

no outstanding number of share options granted to key management of the Group at the end of

the fi nancial years 2017 and 2016.





(c) Key management personnel compensation

Key management personnel compensation is as follows:

The Group2017 2016

$’000 $’000

Salaries and other short-term benefi ts 1,631 2,569

Directors’ fees of the Company 244 244

Employer’s contribution to defi ned contribution plans

including Central Provident Fund 8 10

1,883 2,823

Included in the above was total compensation to directors of the Company amounting to

$1,631,000 (2016: $ 2,567,000).

37. Segment information

The President is the Group’s chief operating decision maker (“CODM”). Management has determined

the operating segments based on the reports reviewed by the CODM that are used to make strategic

decisions.

The key management considers the business from the business segment perspective. The continuing

operations relate to segments in Singapore which derive revenue from shipping, ship repair and marine

engineering.





37. Segment information (continued)

The segment information provided to the key management for the reportable segments is as follows:

Shipping

Ship repair,and marineengineering

activitiesAll other

segments

Total for continuing operations

$’000 $’000 $’000 $’000

Financial year ended 31 December 2017The Group

Sales- External sales 26,739 9,880 567 37,186

- Inter-segment sales – 1 45,907 45,908

26,739 9,881 46,474 83,094

Elimination (45,908)

37,186

Segment results (14,494) 2,271 (15,495) (27,718)

Interest income 1,069


Income tax expense (406)

Net loss (27,055)

Other segment itemsCapital expenditure

- Property, plant and equipment 6 45 16 67

- Investment property – – 148 148

Amortisation of deferred expenditure – 37 – 37

Depreciation of investment properties

and property, plant and equipment 4,373 436 618 5,427

Segment assets/ Consolidated total assets 53,910 16,990 493,236 564,136

Segment liabilities 2,481 2,166 42,123 46,770

Current income tax liabilities 612

Deferred income tax liabilities 132

Consolidated total liabilities 47,514

Consolidated net assets 516,622





Shipping

Ship repair,and marineengineering

activitiesAll other

segments

Total for continuing operations

$’000 $’000 $’000 $’000(restated) (restated) (restated) (restated)

Financial year ended 31 December 2016The Group

Sales- External sales 29,703 9,994 808 40,505

- Inter-segment sales – 495 15,040 15,535

29,703 10,489 15,848 56,040

Elimination (15,535)

40,505

Segment results (19,170) 1,024 (8,120) (26,266)

Interest income 795


Income tax expense (522)

Net loss (25,993)

Other segment itemsCapital expenditure

- Property, plant and equipment 2,219 23,837 14 26,070

Amortisation of deferred expenditure – 37 – 37

Depreciation of investment properties

and property, plant and equipment 11,409 486 663 12,558

Allowance for impairment of property,

plant and equipment 6,608 – – 6,608

Segment assets 170,054 9,408,953 52,338 9,631,345

Associated companies 4,185

Available-for-sale fi nancial assets 4,599

Deferred income tax assets 140,598

Consolidated total assets 9,780,727

Segment liabilities 9,963 2,121,911 2,781 2,134,655

Borrowings 7,315,418

Current income tax liabilities 9,877

Deferred income tax liabilities 263

Consolidated total liabilities 9,460,213

Consolidated net assets 320,514

Sales between segments are carried out at terms agreed between the relevant parties. The revenue from

external parties reported to the CODM is measured in a manner consistent with that in the consolidated

profi t or loss.






Geographical information

The Group’s continuing business segment mainly operate in Singapore. The operations in this area are

principally in shipping, ship repair and marine engineering related activities and rental of property.

Sales are based on the country in which the services are rendered to the customer. Non-current assets

are shown by the geographical area where the assets are located.

Sales from continuing operations

Non-current assets

2017 2016 2017 2016

$’000 $’000 $’000 $’000

(restated)

People’s Republic of China – – – 2,697,252

Singapore* 37,186 40,505 55,337 109,339

37,186 40,505 55,337 2,806,591

* The Group’s shipping companies operate in worldwide shipping routes. Hence, it would not be meaningful to allocate sales

to any geographical segments for shipping activities.

No single external customer has sales which exceed 10% of the Group’s total sales for continuing

operations for the fi nancial years ended 31 December 2017 and 31 December 2016.

38. Events occurring after balance sheet date

(i) On 3 November 2017, the Company made a voluntary conditional cash offer (the “Offer”) to

acquire 100% equity interest in Cogent Holdings Limited (“Cogent”) for a consideration of

$488,070,000. As at 31 December 2017, the Offer remains conditional to the satisfaction of

certain criteria.

On 26 December 2017, the Company entered into a credit facility with the Bank of China Limited

for an amount up to $350,000,000, to partially fi nance the purchase consideration. No amounts

were drawn as at 31 December 2017. On 2 January 2018, the credit facility was drawn down

partially for an amount of $327,649,000.

On 2 January 2018, the Offer turned unconditional and the Company acquired more than 90%

of the issued shares of Cogent. On 6 March 2018, the Company has completed the compulsory

acquisition and Cogent has become a wholly-owned subsidiary of the Company.

(ii) On 3 November 2017, the Company entered into a Share Sale and Purchase Agreement with

a related company, COSCO SHIPPING (South East Asia) Pte Ltd, to acquire approximately

40% equity interest in PT. Ocean Global Shipping for a consideration of $13,953,371. As at

31 December 2017, conditions precedent to the completion of the acquisition have not been fully

satisfi ed.

On 2 February 2018, the Company completed the acquisition of PT. Ocean Global Shipping.

(iii) On 1 January 2018, the Company entered into a loan agreement with a fellow subsidiary to

convert the non-trade payables of $38,000,000 disclosed in Note 26 into a loan. The loan is

unsecured, interest bearing at 2.38% per annum and repayable on 31 December 2018.




39. Full convergence with International Financial Reporting Standards (IFRS) and adoption of

new standards

Singapore-incorporated companies listed on the Singapore Exchange are required to apply a

new fi nancial reporting framework identical to the IFRS, Singapore Financial Reporting Standards

(International) (SFRS(I)s), for annual periods beginning on or after 1 January 2018.

The Group has adopted SFRS(I)s on 1 January 2018 and as a result, the Group’s fi nancial statements

for the fi nancial year ending 31 December 2018 will be prepared in accordance with SFRS(I)s.

In adopting SFRS(I)s, the Group is required to apply all of the specifi c transition requirements in SFRS(I)

1 First-time Adoption of Singapore Financial Reporting Standards (International). The Group expects

that the adoption of SFRS(I)s will have no material impact on the fi nancial statements in the year of initial

application.

In addition to the adoption of SFRS(I)s, the following SFRS(I)s, and amendments and interpretations of

SFRS(I)s that are relevant to the Group and the Company are effective on or after the same date.

SFRS(I) 15 Revenue from Contracts with Customers

SFRS(I) 9 Financial Instruments

SFRS(I) 16 Leases

Amendments to SFRS(I) 9 Prepayment Features with Negative Compensation

Amendments to SFRS(I) 1-28 Long-term Interests in Associates and Joint Ventures

SFRS(I) INT 22 Foreign Currency Transactions and Advance Consideration

SFRS(I) INT 23 Uncertainty over Income Tax Treatments

The management anticipates that the adoption of the above standards and interpretations in future

periods will not have a material impact on the fi nancial statements of the Group and of the Company in

the period of their initial adoption except for the following:

SFRS(I) 15 Revenue from Contracts with Customers

SFRS(I) 15 establishes a single comprehensive model for entities to use in accounting for revenue arising

from contracts with customers.

The core principle of SFRS(I) 15 is that an entity should recognise revenue to depict the transfer of

promised goods or services to customers in an amount that refl ects the consideration to which the entity

expects to be entitled in exchange for those goods or services. Specifi cally, the standard introduces a

5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity satisfi es a performance obligation





39. Full convergence with International Financial Reporting Standards (IFRS) and adoption of

new standards (continued)

SFRS(I) 15 Revenue from Contracts with Customers (continued)

Under SFRS(I) 15, an entity recognises revenue when (or as) a performance obligation is satisfi ed, i.e.

when ‘control’ of the goods or services underlying the particular performance obligation is transferred

to the customer. Far more prescriptive guidance has been added in SFRS(I) 15 to deal with specifi c

scenarios. Furthermore, extensive disclosures are required by SFRS(I) 15.

SFRS(I) 15 will take effect from fi nancial years beginning on or after 1 January 2018. In accordance with

the requirements of SFRS(I) 1, the Group will adopt SFRS(I) 15 retrospectively. The Group is currently

fi nalising the transition adjustments.

SFRS(I) 9 Financial Instruments

SFRS(I) 9 introduces new requirements for classifi cation and measurement of fi nancial instruments,

impairment of fi nancial assets, and hedge accounting. SFRS(I) 9 also introduces expanded disclosure

requirements and changes in presentation. The adoption of SFRS(I) 9 will have an effect on the

classifi cation and measurement of the Group’s fi nancial assets, but no impact on the classifi cation and

measurement of the Group’s fi nancial liabilities.

SFRS(I) 9 will take effect from fi nancial years beginning on or after 1 January 2018. The Group plans to

elect to apply the short-term exemption under SFRS(I) 1, which exempt the Group from applying SFRS(I)

9 to comparative information. The Group is currently fi nalising the transition adjustments.

SFRS(I) 16 Leases

SFRS(I) 16 will result in almost all leases being recognised on the balance sheet, as the distinction

between operating and fi nance leases is removed. Under the new standard, an asset (the right to use

the leased item) and a fi nancial liability to pay rentals are recognised. The only exceptions are short-term

and low-value leases. The accounting for lessors will not change signifi cantly.

Some of the commitments may be covered by the exception for short-term and low-value leases and

some commitments may relate to arrangements that will not qualify as leases under SFRS(I) 16.

The standard also introduces expanded disclosure requirements and changes in presentation.

SFRS(I) 16 will take effect from fi nancial years beginning on or after 1 January 2019.

The standard will affect primarily the accounting for the Group’s operating leases. The future minimum

rental expense payable under signifi cant non-cancellable leases is disclosed in Note 33. The Group has

yet to determine to what extent these commitments will result in the recognition of an asset and a liability

for future payments and how this will affect the Group’s profi t and classifi cation of cash fl ows.




40. Comparative fi gures

The comparative fi gures in the Consolidated Profi t or Loss and related comparative notes to accounts

have been restated as a result of the disposal of subsidiaries detailed in Note 10.

2016 2016

Group

As reclassifi ed

As previously

reported

$’000 $’000


Sales 40,505 2,557,359

Cost of sales (46,509) (2,874,690)

Gross loss (6,004) (317,331)

Other income 2,160 88,633

Other gains and losses (2,803) (31,808)

Expenses

- Distribution (497) (57,137)

- Administrative (18,327) (335,088)

- Finance – (224,784)

Share of loss of associated companies – (250)

Loss before income tax (25,471) (877,765)

Income tax expense (522) (98,319)

Loss from continuing operations (25,993) (976,084)

Discontinued operationsLoss from discontinued operations (950,091) –

Net loss (976,084) (976,084)

41. Authorisation of fi nancial statements

These fi nancial statements were authorised for issue in accordance with a resolution of the Board of

Directors of COSCO SHIPPING International (Singapore) Co., Ltd. on 9 March 2018.


FIVE-YEARSUMMARY


Note 2013 2014 2015 2016 2017$’000 $’000 $’000 $’000 $’000

(Restated) (Restated) (Restated) (Restated)

PROFIT OR LOSSContinuing operationsSales 73,099 70,846 53,137 40,505 37,186

Profi t/(loss) before income tax 613 8,108 (2,560) (25,471) (26,649)

Income tax expense (545) (627) (880) (522) (406)

Profi t/(loss) from continuing operations 68 7,481 (3,440) (25,993) (27,055)

Discontinued operationsProfi t/(loss) from discontinued

operations 52,717 18,796 (911,395) (950,091) 166,875

Total profi t/(loss) 52,785 26,277 (914,835) (976,084) 139,820

Profi t/(loss) attributable to:Equity holders of the Company 30,615 20,893 (569,958) (466,499) 263,876

Non-controlling interests 22,170 5,384 (344,877) (509,585) (124,056)

52,785 26,277 (914,835) (976,084) 139,820

Profi t/(loss) attributable to equity holders of the Company relates to:(Loss)/profi t from continuing

operations (192) 7,110 (3,812) (26,128) (27,248)

Profi t/(loss) from discontinued

operations 30,807 13,783 (566,146) (440,371) 291,124

30,615 20,893 (569,958) (466,499) 263,876

Dividend 1 22,392 11,196 – – –

Notes:

1. No dividend has been declared/recommended for the fi nancial year ended 31 December 2017.

2. The comparative fi gures in the Profi t or Loss have been restated as a result of the disposal of subsidiaries in the fi nancial year ended

31 December 2017.


FIVE-YEARSUMMARY


Note 2013 2014 2015 2016 2017$’000 $’000 $’000 $’000 $’000

BALANCE SHEETShare capital 270,608 270,608 270,608 270,608 270,608

Statutory and other reserves 245,139 284,328 328,838 311,859 (18,958)

Retained earnings/

(accumulated loss) 820,027 812,819 222,586 (246,407) 263,551

Non-controlling interests 839,307 861,750 517,951 (15,546) 1,421

Total equity 2,175,081 2,229,505 1,339,983 320,514 516,622

Trade and other receivables 36,874 4,377 – 102,556 –

Available-for-sale fi nancial assets 4,391 4,841 4,890 4,599 –

Club memberships 303 303 311 280 147

Investment in associated

companies 4,826 4,736 4,854 4,185 –

Investment properties 11,293 10,990 10,579 14,675 13,786

Property, plant and equipment 2,227,868 2,267,057 2,307,323 2,527,363 40,638

Intangible assets 9,539 9,564 9,583 9,536 –

Deferred expenditure 3,066 3,029 2,980 2,799 766

Deferred income tax assets 225,212 267,901 236,932 140,598 –

Current assets 6,211,360 7,372,499 7,777,241 6,974,136 508,799

Current liabilities (4,702,660) (5,172,565) (6,467,535) (6,441,623) (47,382)

Non-current liabilities (1,856,991) (2,543,227) (2,547,175) (3,018,590) (132)

Net assets 2,175,081 2,229,505 1,339,983 320,514 516,622

RATIOSBasic earnings per share from

continuing operations (cents) 1 – 0.3 (0.2) (1.1) (1.2)

Basic earnings per share from

discontinued operations (cents) 2 1.4 0.6 (25.3) (19.7) 13.0

Dividend per share (cents) 1.0 0.5 – – –

Dividend cover (times) 3 1.4 1.9 – – –

Net tangible assets per share

(cents) 59.2 60.7 36.3 14.6 23.0

Gearing ratio (net of cash) 4 1.3 2.5 6.0 17.2 Net cash

Notes:

1. Basic earnings per share from continuing operations is calculated as net profi t/(loss) from continuing operations attributable to equity

holders of the company divided by the weighted average number of ordinary shares issued in the fi nancial year.

2. Basic earnings per share from discontinued operations is calculated as net profi t/(loss) from discontinued operations attributable to

equity holders of the company divided by the weighted average number of ordinary shares issued in the fi nancial year.

3. The dividend cover is calculated as net profi t attributable to equity holders of the Company divided by the amount of equity dividend.

4. Gearing ratio is derived by taking total borrowings (net of cash) over the shareholders’ funds.


SHAREHOLDINGSTATISTICS

As at 9 March 2018

Number of Shares in Issue : 2,239,244,954Class of shares : Ordinary shares Voting rights : On a Poll: 1 vote for each ordinary share

DISTRIBUTION OF HOLDERS OF SHARES BY SIZE OF SHAREHOLDINGS AS AT 9 MARCH 2018

SIZE OFSHAREHOLDINGS

NO. OFSHAREHOLDERS %

NO. OF SHARES %

1 - 99 27 0.09 772 0.00 100 - 1,000 2,348 7.42 2,281,737 0.10 1,001 - 10,000 17,370 54.90 98,354,003 4.39 10,001 - 1,000,000 11,840 37.42 594,742,554 26.56 1,000,001 and above 53 0.17 1,543,865,888 68.95 Total 31,638 100.00 2,239,244,954 100.00

SUBSTANTIAL SHAREHOLDERS AS AT 9 MARCH 2018

Name of substantial shareholdersDirect Interest Indirect Interest

No. of Shares % No. of shares %

China Ocean Shipping (Group) Company 1,194,565,488 53.35 – –China COSCO Shipping Corporation Limited* – – 1,194,565,488 53.35

* China COSCO Shipping Corporation Limited is deemed interested in the shares held by China Ocean Shipping (Group) Company.

TOP TWENTY HOLDERS OF SHARES AS AT 9 MARCH 2018

SHAREHOLDER’S NAME NO. OF SHARES %

1 CHINA OCEAN SHIPPING COMPANY 1,194,565,488 53.352 CITIBANK NOMINEES SINGAPORE PTE LTD 63,498,308 2.843 DBS NOMINEES PTE LTD 49,400,015 2.214 UNITED OVERSEAS BANK NOMINEES PTE LTD 26,526,511 1.185 UOB KAY HIAN PTE LTD 19,702,300 0.886 RAFFLES NOMINEES (PTE) LTD 17,852,988 0.807 OCBC SECURITIES PRIVATE LTD 16,777,524 0.758 PHILLIP SECURITIES PTE LTD 14,149,394 0.639 OCBC NOMINEES SINGAPORE PTE LTD 13,416,869 0.6010 CGS-CIMB SECURITIES (SINGAPORE) PTE LTD 13,243,837 0.5911 MAYBANK KIM ENG SECURITIES PTE LTD 8,067,932 0.3612 HSBC (SINGAPORE) NOMINEES PTE LTD 7,868,722 0.3513 CHUA LIAK CHNG SC 7,064,000 0.3214 LIM & TAN SECURITIES PTE LTD 6,505,500 0.2915 ARIFIN @ LIE TJONG TJIN @ LIE CHANG CHIN 6,000,000 0.2716 HUI SHUNE MING @ HUI SHUN MENG 5,600,000 0.2517 LEE FOOK CHOY 5,366,000 0.2418 DBSN SERVICES PTE LTD 5,340,169 0.2419 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 5,004,850 0.2220 SEE SEE MENG 5,000,000 0.22

Total 1,490,950,407 66.59

Note: The percentages are computed based on 2,239,244,954 ordinary shares as at 9 March 2018.

SHARES HELD BY PUBLIC

Based on the information available and to the best knowledge of the Company as at 9 March 2018, approximately 46.51% of the ordinary shares of the Company are held by the public. The Company is therefore in compliance with Rule 723 of the SGX-ST Listing Manual.


NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at Marina Bay

Sands (MBS) Sands Expo & Convention Centre, Level 3 Cassia Ballroom 3201A-3 & 3301A-3 on Friday,

27 April 2018 at 2:00 p.m. for the purpose of transacting the following businesses:

ORDINARY BUSINESS:

1. To receive and adopt the Audited Financial Statements for the fi nancial year ended 31 December 2017 and the Reports of the Directors and the Auditors thereon.

(Resolution 1)

2. To approve payment of Directors’ Fees of S$244,000 for the year ended 31 December 2017. (last year: S$244,000)

(Resolution 2)

3. To re-elect the following directors, on recommendation of the Nominating Committee and endorsement of the Board of Directors, who are retiring in accordance with Article 98 of the Constitution of the Company and who, being eligible, offer themselves for re-election:

a. Mr Wang Yu Hang (See Explanatory Note 1) (Resolution 3) b. Mr Er Kwong Wah (See Explanatory Note 2) (Resolution 4)

4. To note the retirement of Mr Tom Yee Lat Shing as a director pursuant to Article 98 of the Constitution of the Company (See Explanatory Note 3).

5. To re-appoint Messrs. PricewaterhouseCoopers LLP as Auditors and to authorise the Directors to fi x their remuneration.

(Resolution 5)

SPECIAL BUSINESS:

To consider and, if thought fi t, to pass the following as Ordinary Resolution, with or without modifi cations:

6. General Mandate to authorise the Directors to issue shares or convertible securities:

“That pursuant to Section 161 of the Companies Act (Cap 50) and the Listing Rules of the Singapore Exchange Securities Trading Limited (the “Listing Rules”), authority be and is hereby given to the Directors to:

(a) issue shares in the capital of the Company (whether by way of bonus, rights or otherwise); or

(b) make or grant offers, agreements or options that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, options, debentures or other instruments convertible into Shares;

at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fi t provided that:

(i) the aggregate number of shares and convertible securities that may be issued shall not be more than 50% of the issued shares in the capital (excluding treasury shares and subsidiary holdings, if any) of the Company (calculated in accordance with (ii) below), of which the aggregate number of shares and convertible securities issued other than on a pro rata basis to existing shareholders must be not more than 20% of the issued shares in the capital of the Company (calculated in accordance with (ii) below); and

(Resolution 6)



(ii) for the purpose of determining the aggregate number of shares and convertible securities that may be issued pursuant to (i) above, the percentage of issued share capital (excluding treasury shares and subsidiary holdings, if any) shall be calculated based on the issued shares in the capital (excluding treasury shares and subsidiary holdings, if any) of the Company at the time of the passing of this resolution after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities; (b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this resolution and (c) any subsequent consolidation or subdivision of shares; and

(iii) unless revoked or varied by ordinary resolution of the shareholders of the Company in general meeting, this resolution shall remain in force until the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.” (See Explanatory Note 4)

7. To transact any other business which may be properly transacted at an Annual General Meeting.

BY ORDER OF THE BOARD

Tan Wee Sin

Company Secretary

Singapore, 5 April 2018

Explanatory Notes on Business to be transacted

1. Mr Wang Yu Hang will, upon re-election as a Director, remain as a member of the Strategic Development Committee of the

Company.

2. Mr Er Kwong Wah will, upon re-election as a Director, remain as the Chairman of the Remuneration Committee and a member of the

Enterprise Risk Management, Audit, Nominating and Strategic Development Committees of the Company; and will be considered

independent for the purpose of Rule 704(8) of the Listing Manual of the SGX-ST.

3. Mr Tom Yee has indicated that he will not be seeking re-election as a Director of the Company and will retire at the conclusion of

the AGM. Upon Mr Tom Yee’s retirement, he will cease as Chairman of the Audit Committee and a member of the Enterprise Risk

Management, Nominating, Remuneration and Strategy Development Committees.

4. Ordinary Resolution 6 is to empower the Directors of the Company from the date of the above Meeting until the next Annual General

Meeting to issue shares and/or convertible securities in the capital of the Company up to an amount not exceeding in aggregate

50% of the issued shares in the capital (excluding treasury shares and subsidiary holdings, if any) of the Company of which the total

number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall not exceed 20% of

the issued shares in the capital (excluding treasury shares and subsidiary holdings, if any) of the Company at the time the resolution

is passed, for such purposes as they consider would be in the interests of the Company. This authority will, unless revoked or varied

at a general meeting, expire at the next Annual General Meeting of the Company.



NOTES:

i. A member of the Company entitled to attend and vote at a meeting is entitled to appoint one or two proxies to attend and vote in

his stead. A proxy need not be a member of the Company.

ii. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifi es the proportion of his shareholding

(expressed as a percentage of the whole) to be represented by each proxy.

iii. Pursuant to Section 181 of the Companies Act, Cap. 50 of Singapore, any member who is a Relevant Intermediary may appoint

more than two proxies, but each proxy must be appointed to exercise the rights attached to a different share or shares held by him

(which number and class of shares shall be specifi ed).

*Relevant Intermediary is:

(a) a banking corporation licensed under the Banking Act (Cap. 19) or a wholly-owned subsidiary of such a banking corporation,

whose business includes the provision of nominee services and who holds shares in that capacity; or

(b) a person holding a capital markets services license to provide custodial services for securities under the Securities and

Futures Act (Cap. 289) and who holds shares in that capacity; or

(c) the Central Provident Fund Board (“CPF Board”) established by the Central Provident Fund Act, Chapter 36 of Singapore,

in respect of shares purchased under the subsidiary legislation made under that Act providing for the making of investments

from the contributions and interest standing to the credit of members of the Central Provident Fund, if the CPF Board holds

those shares in the capacity of an intermediary pursuant to or in accordance with that subsidiary legislation.

iv. A corporation which is a member may also authorise by resolution of its directors or other governing body, such person as it thinks

fi t to act as its representative at the meeting in accordance with Section 179 of the Companies Act (Cap 50).

v. This instrument appointing a proxy or proxies must be under the hand of the appointer or his attorney duly authorised in writing.

Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal

or under the hand of any attorney duly authorised.

vi. Where an instrument appointing a proxy is signed on behalf of the appointor by the attorney, the letter or power of attorney or a duly

certifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the

instrument may be treated as invalid.

vii. The instrument appointing a proxy or proxies must be deposited at Company’s Share Registrar, Tricor Barbinder Share Registration

Services at 80 Robinson Road #11-02, Singapore 068898 not later than 48 hours before the time fi xed for holding the Annual

General Meeting.

Personal data privacy:

By submitting a proxy form appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment

thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its

agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for

the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents

relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable

laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal

data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent

of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of

such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any

penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

COSCO SHIPPING INTERNATIONAL

(SINGAPORE) CO., LTD.(Incorporated in the Republic of Singapore)

(Company Registration No.: 196100159G)

ANNUAL GENERAL MEETINGPROXY FORM

Important:1. For investors who have used their CPF/SRS monies to buy

the Company’s shares, this Annual Report is sent to them

at the request of their CPF/SRS Approved Nominees solely

FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF/SRS investors

and shall be ineffective for all intents and purposes if used

or purported to be used by them.

3. CPF/SRS investors who wish to vote should contact their

CPF/SRS Approved Nominees.

I/We NRIC/Passport No.

of

being a member of COSCO SHIPPING International (Singapore) Co., Ltd. (the “Company”), hereby appoint

Name Address NRIC/Passport No.Proportion of

Shareholdings (%)

And/or (delete as appropriate)

Name Address NRIC/Passport No.Proportion of

Shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand

a poll, at the Annual General Meeting of the Company to be held at Marina Bay Sands (MBS) Sands Expo &

Convention Centre, Level 3 Cassia Ballroom 3201A-3 & 3301A-3 on Friday, 27 April 2018 at 2:00 p.m. and at any

adjournment thereof.

I/We have indicated with an “X” in the appropriate box against the item how I/we wish my/our proxy/proxies to

vote. If no specifi c direction as to voting is given or in the event of any item arising not summarised below, my/our

proxy/proxies may vote or abstain at the discretion of my/our proxy/proxies.

No. Resolutions For Against

ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements for the year

ended 31 December 2017 and the Reports of the Directors and the

Auditors thereon.

2. To approve payment of Directors’ Fees.

3. To re-elect Mr Wang Yu Hang, who is retiring under Article 98 of the

Constitution of the Company.

4. To re-elect Mr Er Kwong Wah, who is retiring under Article 98 of the

Constitution of the Company.

5. To re-appoint Messrs. PricewaterhouseCoopers LLP as Auditors of the

Company and to authorise the Directors to fi x their remuneration.

SPECIAL BUSINESS

6. To authorise Directors to issue shares pursuant to Section 161 of the

Companies Act, Cap 50.

Dated this day of 2018

Total No. of Shares in No. of SharesCDP Register

Register of Members

Signature of member(s) or Common Seal

IMPORTANT: Please Read Notes for This Proxy Form.

NOTES:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register

(as defi ned in section 81SF of the Securities and Futures Act, Chapter 289 of Singapore), you should insert that number of Shares.

If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares

entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert

the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of

Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member (other than a Relevant Intermediary) of the Company entitled to attend and vote at a meeting of the Company is entitled to

appoint one or two proxies to attend and vote on his behalf. Such proxy need not be a member of the Company. Where a member

appoints two proxies, the appointments shall be invalid unless he specifi es the proportion of his shareholding (expressed as a

percentage of the whole) to be represented by each proxy.

3. A member of the Company who is a Relevant Intermediary entitled to attend and vote at the AGM of the Company is entitled to appoint

more than two (2) proxies to attend and vote in his/her stead, but each proxy must be appointed to exercise the rights attached to

a different share or shares held by such member. Where such member appoints more than two (2) proxies, the number and class of

shares to be represented by each proxy must be stated.

“Relevant Intermediary” means:

(a) a banking corporation licensed under the Banking Act, Chapter 19 of Singapore or a wholly owned subsidiary of such a banking

corporation, whose business includes the provision of nominee services and who holds shares in that capacity;

(b) a person holding a capital markets services licence to provide custodial services for securities under the Securities and Futures

Act, Chapter 289 of Singapore and who holds shares in that capacity; or

(c) the Central Provident Fund Board (“CPF Board”) established by the Central Provident Fund Act, Chapter 36 of Singapore, in

respect of shares purchased under the subsidiary legislation made under that Act providing for the making of investments from

the contributions and interest standing to the credit of members of the Central Provident Fund, if the CPF Board holds those

shares in the capacity of an intermediary pursuant to or in accordance with that subsidiary legislation.

4. The instrument appointing a proxy or proxies must be deposited at the Company’s Share Registrar, Tricor Barbinder Share Registration

Services at 80 Robinson Road #11-02, Singapore 068898 not less than 48 hours before the time set for holding the annual general

meeting. The sending of a Proxy Form by a member does not preclude him from attending and voting in person at the annual general

meeting if he fi nds that he is able to do so. In such event, the relevant Proxy Forms will be deemed to be revoked.

5. The instrument appointing a proxy or proxies must be under the hand of the appointer or of his attorney duly authorised in writing.

Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the

hand of a director or an offi cer or attorney duly authorised.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointer by an attorney, the power of attorney (or other

authority) or a duly certifi ed copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy,

failing which the instrument may be treated as invalid.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act

as its representative at the annual general meeting, in accordance with section 179 of the Companies Act, Chapter 50 of Singapore.

8. An investor who buys shares using CPF monies (‘‘CPF Investor”) and/or SRS monies (“SRS Investor”) (as may be applicable) may

attend and cast his vote(s) at the Meeting in person. CPF and SRS Investors who are unable to attend the Meeting but would like to

vote, may inform their CPF and/or SRS Approved Nominees to appoint the Chairman of the Meeting to act as their proxy, in which

case, the CPF and SRS Investors shall be precluded from attending the Meeting.

GENERAL:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or

where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing

a proxy or proxies. In addition, in the case of members whose shares are deposited with The Central Depository (Pte) Limited, the Company

may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered

against his/her name in the Depository Register as at seventy-two (72) hours before the time appointed for holding the Annual General

Meeting as certifi ed by The Central Depository (Pte) Limited to the Company

PERSONAL DATA PRIVACY:

By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal data privacy

terms set out in the Notice of Annual General Meeting dated 5 April 2018.

30 Cecil Street#26-01 Prudential Tower

Singapore 049712Telephone: 6885 0888Facsimile: 6885 0858

www.cosco.com.sg

cosco shipping international (singapore) co.,...

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